Indian Government Bond yields are influenced by ?

Indian Government Bond yields can be influenced by various factors. Some key factors include:

1. Interest Rates: Changes in the prevailing interest rates set by the Reserve Bank of India (RBI) can have a significant impact on bond yields. When interest rates rise, bond yields tend to increase as well, making existing bonds less attractive.

2. Inflation Expectations: Inflation expectations play a crucial role in determining bond yields. If investors anticipate higher inflation in the future, they may demand higher yields to compensate for the erosion of purchasing power.

3. Economic Conditions: The overall health of the economy, including factors like GDP growth, employment levels, and business sentiment, can influence bond yields. Strong economic conditions may lead to higher yields as investors seek higher returns.

4. Fiscal Policy: The government’s fiscal policy, including its budget deficit or surplus, can impact bond yields. Higher government borrowing requirements to fund deficits may increase bond supply and push yields higher.

5. Market Sentiment: Investor sentiment and market conditions can also impact bond yields. Factors like global economic trends, geopolitical events, and investor risk appetite can influence demand for government bonds and, subsequently, their yields.

It’s important to note that these factors are interconnected and can interact in complex ways, leading to fluctuations in bond yields.