India's Government Bond Yields Surge Amid Rate Hike Expectations

India's government bond yields have surged significantly in the latest weekly auction, indicating that fixed-income traders are pricing in potential interest rate hikes by the central bank. According to Jin10, data shows that on Wednesday, the yield on 364-day government bonds rose by 21 basis points to 5.9750%, marking the largest increase in nearly four years. The yield on 182-day government bonds increased by 22 basis points, while the shortest-term bond yields rose by over 18 basis points. Puneet Pal, Head of Fixed Income at PGIM India Mutual Fund, stated, "The pricing of three-month government bonds has already factored in a 25 basis point rate hike expectation, which is inevitable as government bond yields are too low compared to overnight index swaps and bank fixed deposits."