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India bonds fall for a fifth week after Fed hike and RBI squeeze
On the week ending 18 September 2026, Indian government bond prices fell again. Yields rose as the Fed hiked and the RBI tightened liquidity. Here is what that means in simple words.
What happened
On Friday 18 September 2026, Indian government bonds closed another weak week. News desks called it the fifth week in a row of losses.
Three things hit together that week:
- The US Federal Reserve raised its policy rate by 0.25%.
- Global bond yields jumped. The US 10-year Treasury was reported near multi-year highs around 5%.
- The RBI sold bonds and tightened liquidity (spare cash in the banking system), so there was more supply when demand was already soft.
Key number: the benchmark Indian bond (the 6.94% 2036 paper) closed at a yield of about 7.0686% on 18 September, up from about 7.0463% on Thursday. For the week, that yield rose about 4.5 basis points.
Words you need
Bond: a loan to the government. India pays interest for using that money.
Price and yield: they move opposite ways. When people sell, the price falls. When the price falls, the yield (interest rate on that bond) rises. So “bonds lost” usually means prices down, yields up.
Basis point: 0.01%. So 4.5 bps is 0.045%. Small on paper, but bond desks watch every point because huge money sits in G-Secs.
Liquidity: how much spare cash banks have. If the RBI drains it, buying bonds can get harder.
Fed vs RBI: the Fed sets US rates. The RBI sets India’s. If US rates stay high, global money can prefer US paper unless Indian yields also stay attractive. That is why a Fed hike shows up in Mumbai.