New Delhi, June 12 -- The yield gap between India's 10-year government bond and the US 10-year Treasury note has narrowed significantly, falling to just around 1.88% - a far cry from the 6.35% spread seen in 2014. The development comes amid a steady drop in Indian bond yields driven by easing inflation, a dovish monetary policy stance from the Reserve Bank of India (RBI), and improving macroeconomic fundamentals.

The benchmark Indian 10-year bond yield was last quoted at 6.3014%, compared with 6.3069% in the previous session, while the US 10-year Treasury yield declined 5.4 basis points to 4.42%. This compression in yield differential has implications for foreign investor interest in Indian debt, particularly as US yields have risen on a...