Indian government bonds maintained a steady profile on Wednesday, February 18, 2026, as the market absorbed the impact of recent liquidity management and prepared for significant upcoming supply. Trading activity reflects a balancing act between domestic fiscal strategy and evolving global cues. The benchmark **10-year government bond yield** held firm near **6.67%**, hovering close to its lowest level in three weeks. This stability follows a notable decline from the **6.71%** to **6.73%** range seen earlier in the month. Market participants are closely watching the **6.64%** to **6.69%** corridor for the benchmark security. Redemption pressures for the upcoming 2026-27 fiscal year have been significantly mitigated by a successful debt switch operation. The government recently bought back **755.04 billion rupees** of securities maturing in the next financial year, issuing **694.36 billion rupees** of longer-dated **2040 bonds** in their place. A second major conversion is scheduled for February 23, involving an additional **25,000 crore rupees**. This move is designed to smoothen the redemption profile ahead of a heavy **5.47 trillion rupee** maturity pipeline. By extending maturities, the government aims to lower gross borrowing requirements for the next cycle. Inflation data remains a key anchor for market sentiment. The latest retail inflation print for January came in at **2.75%** under the newly revised **2024 base year** series. While this is an uptick from the previous month’s record lows, it remains well within the central bank's **2% to 6%** tolerance band. Liquidity remains in a comfortable surplus, averaging roughly **70,000 crore rupees** daily. This has kept short-term rates stable, with the one-year overnight index swap (OIS) rate settling near **5.50%** and the two-year rate at **5.64%**. Attention is now shifting toward Friday's major bond auction. Traders are also monitoring the **U.S. 10-year Treasury yield**, which has softened to approximately **4.05%** on expectations of global rate cuts. The combination of domestic debt management and stable inflation continues to support a neutral-to-positive outlook for Indian gilts.