**Market Brief: Indian Sovereign Bond Update** **Current Status** Indian sovereign bonds ended the week under continued pressure, with the benchmark 10-year yield hardening to **6.72%** as of Friday, January 30. The market remains nervous ahead of the Union Budget on February 1, driven by fears of a record government borrowing program for the next fiscal year. **Supply Side Pressures** Sentiment has weakened due to a supply glut. State governments raised nearly **₹39,800 crore** in bond sales this week, reinforcing concerns that debt issuance is outpacing demand. Traders are bracing for the federal budget announcement, where gross borrowing for FY27 is projected to hit a record **₹16–17.5 trillion**. This heavy supply pipeline is the primary weight on bond prices right now. **RBI Intervention** To counter the spike in yields and alleviate tight liquidity, the Reserve Bank of India has actively stepped in. The central bank advanced its Open Market Operations (OMO), committing to bond repurchases and announcing a **$10 billion** forex swap to inject durable liquidity. Despite these support measures, the "supply fear" narrative continues to dominate trading desks. **Global Headwinds** External factors are adding to the bearish tone. U.S. Treasury yields have ticked up, with the 10-year note trading around **4.26%**, influenced by speculation regarding future Federal Reserve leadership. This rise in global rates is reducing the appetite for emerging market debt and keeping the Indian rupee under pressure near the **92** per dollar mark. **Week Ahead** Volatility is expected to remain high. Market focus is entirely locked on two critical events: the fiscal mathematics in Sunday's Budget and the RBI Monetary Policy Committee meeting scheduled for **February 4–6**. While a recent rate cut to **5.25%** provided some relief, investors are now waiting to see if the central bank will pause or continue easing in the face of these fiscal challenges. *** To help you visualize the current technical setup before the Budget, I can generate a chart showing the 10-year yield's resistance levels over the last month.