Factors Influencing Government Bond Yields

All three statements are correct. Statement 1 is correct because actions of the US Federal Reserve cause capital inflows or outflows from emerging markets, impacting bond prices and yields. Statement 2 is correct as domestic open market operations and policy rates set by the RBI directly determine domestic liquidity and bond yields. Statement 3 is correct because bond yields adjust upward to compensate for higher inflation and align with prevailing short-term interest rates. > Sovereign bond yields are dynamically affected by global monetary shocks, domestic central bank policies, and inflation expectations. Answer: (d).