Indian government bonds are anticipated to relinquish some gains from the previous session during early trading on Thursday, following comments from the United States and Iran that suggest peace is not yet achieved, which has sustained Brent crude prices above $100 per barrel.
The benchmark Indian 6.48% 2035 bond yield is projected to fluctuate in the 6.90%-6.95% range, as noted by a trader at a private bank, after concluding at 6.9219% on Wednesday. This yield experienced its largest single-day drop in four weeks on Wednesday, with bond yields moving inversely to prices.
“The ongoing negotiations between the U.S. and Iran have become more of a concern than the conflict itself, and we should see some gains retreating today,” the trader remarked.
Oil prices climbed during Asian trading hours on Thursday, after U.S. President Donald Trump indicated that it was “too soon” for direct discussions with Tehran, while a senior Iranian legislator criticized the U.S. proposal as more of a wish list than a feasible agreement.
The benchmark Brent crude was trading around $101 per barrel, recovering from a two-week low hit on Wednesday.
Iran is currently assessing a U.S. peace proposal aimed at formally concluding the conflict, but the plan leaves unresolved critical U.S. demands for Iran to suspend its nuclear program and to reopen the Strait of Hormuz. Despite a ceasefire being in place, the strait, responsible for carrying approximately one-fifth of the world’s oil and natural gas supply, has largely remained closed since the onset of the war on February 28.
Market participants are also focused on an upcoming auction of a new 10-year debt on Friday, wherein New Delhi aims to raise 340 billion rupees ($3.59 billion) through this issuance, intended to replace the existing benchmark bond in the coming weeks.
In terms of rates, India’s overnight index swap (OIS) rates may see an increase following significant receiving interest on Wednesday. The one-year OIS rate settled at 5.90%, while the two-year swap rate closed at 6.10%. The five-year rate finished at 6.4950%, all declining by 14 to 18 basis points.
Published on May 7, 2026.
