India 10-Year Benchmark Bond Yield Hits 7% for 1st Time Since June 5 Amid Global Debt Selloff and Crude Spike

India’s benchmark 10-year government bond yield crossed the critical 7.00% threshold on September 2, 2026, marking its 1st return to this level since June 5, 2026. The yield on the benchmark 6.94% 2036 bond rose 3 bps to trade at 6.9898% after an intraday touch of 7.0000%, extending a sharp 11 bps increase recorded across August 2026.

The selloff in Indian sovereign debt is accelerating due to compounding external and domestic pressures. Brent crude oil prices have surged above $95 per barrel to hit a 6-week high, driven by expanding US military strikes against Iranian targets and mounting maritime security risks in the Persian Gulf. As the world’s 3rd largest crude importer, India faces immediate risks of imported inflation, rising trade deficits, and fiscal pressure from sustained high energy prices.

Global bond markets are adding significant downward momentum to domestic paper. The US 10-year Treasury yield rose to 4.81%-its highest mark since November 2023-substantially narrowing the yield spread that attracts foreign portfolio inflows into Indian debt. Concurrently, Japan’s 10-year government bond yield reached 3.00% for the 1st time in 30 years, fueling broad-based liquidation across global fixed-income assets. CME FedWatch data now reflects a 68% probability of a 25-bps rate hike by the US Federal Reserve in September 2026, up from 41% just 7 days ago.