India’s 10-year G-Sec (government security) yield rose to around 7.1%, its highest level in more than four months, as a sharp selloff in US Treasuries and expectations of further liquidity tightening by the Reserve Bank of India (RBI), India’s central bank, pushed domestic yields higher. Market participants linked the rise in US yields to stronger economic data that renewed inflation concerns. Brent crude’s move back above $100 a barrel added to India’s inflation risks and expectations of an RBI rate increase at its October policy meeting. The RBI has reportedly carried out at least $10 billion in sell-buy FX swaps, which exchange currencies across two linked transactions, in recent weeks to absorb excess rupee liquidity. Surplus banking liquidity had reached a record INR 11 trillion earlier this month, and continued central-bank efforts to drain cash are expected to keep domestic borrowing costs elevated.