India bonds up on oil slump, foreign inflows; 10-year yield posts biggest monthly fall in 7 years

Indian government bonds rallied sharply in June, with the benchmark 10-year yield falling 26 basis points to 6.7501 percent, the steepest monthly drop since July 2019. The rally was fuelled by a 21 percent slump in Brent crude, record foreign inflows of nearly USD 3 billion via the Fully Accessible Route, RBI measures to attract dollar flows, and the removal of taxes on foreign bond investment. Overnight index swap rates also plunged, with markets now pricing in only about 50 basis points of rate hikes versus over 125 basis points earlier.