The $10 trillion question

Summary: Rising US bond yields and heavy FPI selling haven't cracked Indian markets the way they used to, because domestic SIP flows are now absorbing the exit, but this piece flags that dependence as the market's real vulnerability if those flows ever weaken. It walks through the connected pressures on the rupee, gold and equity valuations from here.

Summary: Rising US bond yields and heavy FPI selling haven't cracked Indian markets the way they used to, because domestic SIP flows are now absorbing the exit, but this piece flags that dependence as the market's real vulnerability if those flows ever weaken. It walks through the connected pressures on the rupee, gold and equity valuations from here. The US government is refinancing close to $10 trillion of maturing debt this year. A large part of the burden traces back to the short-term borrowing surge which began around the pandemic, while much of the older debt stock was originally financed when rates were far lower. But when the biggest borrower in the world has to keep returning to the market, the yield on offer has to stay attractive enough to keep the money coming, and it sets the cost of money for the rest of us. The US 10-year crossed 5 per cent this past week, its highest since 2007. The Fed raised its target range by 25 basis points to 3.75 per cent to 4 per cent and has signalled at least one more hike. Where the foreign money went Global money compares where it can earn the best risk-adjusted return. At 5 per cent in the world’s deepest bond market, with no currency and equity risk for a dollar investor, the comparison gets uncomfortable for every emerging market. Our 10-year G-Sec has climbed to around 7.1 per cent and is at nearly four-month highs, helped along by Rs 1 trillion of RBI bond sales. The gap over American paper is now roughly 210 basis points. FPIs hav

This article was originally published on October 01, 2026.