Indian govt bonds surge as SVB collapse casts doubt on Fed rate hike

Rupee gains and Indian yield curve steepens as short-term bonds benefit from Fed view

Indian government bonds strengthened sharply, particularly those of shorter maturity, as the collapse of the California-based Silicon Valley Bank (SVB) prompted investors to rush to the safety of American debt, leading to a plunge in US bond yields.

A decline in US bond yields increases the appeal of higher-yielding fixed-income assets in emerging markets such as India. The rupee also strengthened, gaining 14 paise versus the US dollar to 81.91, as the decline in returns from US bonds led to a weaker dollar index, traders said.

The most liquid Indian 10-year bond was last trading at 7.38 per cent yield