India’s benchmark 10-year government bond yield is expected to remain in the 6.50-6.60 per cent band during September, according to a report released by Bank of Baroda.The report highlighted that the announcement of the second-half borrowing calendar will be a key factor, as the allocation of securities across maturity buckets could provide some relief for yields.It stated, “We expect India’s 10Y yield to trade in the range of 6.50-6.60 per cent in the current month.”As per news agency ANI, the bank noted that a widening interest rate differential with the United States is also supportive. While the US Federal Reserve has already begun its rate-cutting cycle, the Reserve Bank of India (RBI) has opted to maintain its policy stance, reinforcing expectations of a prolonged status quo in domestic rates.Globally, yields have been mixed. US yields are showing a softening bias following comments from Federal Reserve Chair hinting at a September rate cut, while other advanced economies remain cautious, adopting a “wait and watch” approach. The CME Fed Watch tool suggests traders are increasingly pricing in the likelihood of a cut this month.Domestically, the report observed firmness in August 2025, with the longer end of the yield curve showing the most movement. This “bear steepening” was attributed to fading hopes of an RBI rate cut and concerns over excess supply of government securities.The report added, “Most of the increase in yields happened post RBI policy where traders have formed set of expectations that India is way past rate cut cycle and has entered a status quo phase.”According to Bank of Baroda, the strong GDP growth print for the first quarter has further validated this view, despite base effects and deflator-related issues, reinforcing expectations that monetary policy will remain steady in the near term.
