Bond yields jump after fuel tax cut as oil spikes and debt supply weighs

Fuel duty cut may worsen the fiscal picture

Indian government bonds fell sharply after the government cut fuel excise duty, unsettling investors about the fiscal outlook. The move arrived as war-related oil price surges boosted inflation fears, while a heavy schedule of new debt issuance increased supply pressure. Together, these factors pushed the benchmark 2035 bond yield to its highest level since July 2024.