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2026-05-27 18:09:15
[India's 364-day Treasury bill yield breaks 6%, hitting a 14-month high; spread with 10-year government bonds narrows sharply to 95 basis points] ⑴ The yield on India's 364-day Treasury bills rose to 6.03% on Wednesday, breaking the 6% mark for the first time in nearly 14 months, and marking the sixth consecutive week of increases for this instrument. A trader at a small financial bank said that rising market concerns about interest rate hikes and investors' reluctance to make any directional bets on the one-year maturity were the main reasons for the continued rise in short-term interest rates. ⑵ This change in the yield curve led to a sharp narrowing of the spread between the 364-day Treasury bill and 10-year government bond yields, from 140 basis points two weeks ago to 95 basis points, the lowest level in four months. ⑶ The current one-year overnight index swap rate is 6.10%, indicating that market expectations for higher short-term interest rates are still brewing. The Reserve Bank of India will announce its latest interest rate decision on June 5, and the market will closely watch whether the central bank will take action to address inflationary pressures. The continued rise in short-term interest rates has added more uncertainty to next week's policy meeting.
