Bond Market Jitters: Budget Borrowing Looms as 10-Year Yield Hits 6.7%

• India's bond market is keenly watching the Union Budget for government borrowing figures, with the 10-year bond yield reaching 6.7% in January.
• RBI has absorbed 75% of net government bond supply over 13 months, but rising global commodity prices and developed market yields signal potential for further yield increases.
• Suyash Choudhary of Bandhan AMC suggests bond yields have room to rise, projecting a 10-year yield range of 6.55% to 6.85%.
• Market expects central government borrowing of ₹11.5-11.7 lakh crore in FY27, with total bond supply potentially reaching ₹29 lakh crore including state borrowing and redemptions.
• Abhishek Upadhyay of ICICI Securities anticipates net borrowing similar to current fiscal year at ₹11.6 lakh crore, supported by small savings, with gross borrowing uncertainty depending on RBI's role.

Why It Matters: The bond market faces uncertainty over government borrowing in the Union Budget, potentially pushing yields higher.