India Bonds Rangebound Ahead of RBI Decision, Auctions

Indian government bond yields traded in a tight range around roughly 6.47%–6.50% for the 10‑year benchmark as markets swung between gains and losses this week. Traders positioned ahead of the Reserve Bank of India’s Oct. 1 policy decision and the month‑end release of the H2 FY26 federal borrowing calendar and states’ quarterly plans. New Delhi has scheduled auctions of 15‑ and 40‑year bonds of 160 billion rupees each for Friday, raising concern that longer‑tenor supply could outstrip demand and prompting calls to cut ultra‑long issuance. Weekly state debt auctions have shown strong demand and lower‑than‑expected cutoffs, while domestic liquidity has slipped into a deficit and overnight index swaps sit in the mid‑5% area. Higher U.S. Treasury yields and a softer rupee have at times weighed on local bonds, and forecasters and lenders including Capital Economics, Barclays and State Bank of India flag scope for rate cuts later this year, leaving markets likely range‑bound and cautious into quarter‑end.