Indian government bonds are expected to continue their downward trend in early trading on Thursday, following a rise in US Treasury yields that complicates an already challenging market impacted by soaring oil prices over the past two months.
US Treasuries experienced a significant selloff overnight, with yields increasing further during Asian trading hours after the Federal Reserve announced that it would keep interest rates unchanged. This decision marked the most divided vote within the Fed since 1992, with three of the 12 policymakers dissenting and urging against a bias toward easing monetary policy.
The yield on India’s benchmark 6.48 percent 2035 bond is projected to fluctuate between 6.98 percent and 7.05 percent, according to a private-bank trader, after concluding at 6.9928 percent on Wednesday. Bond yields move inversely to prices.
“Sentiment is clearly defensive as the movement in Treasuries presents another headwind for a market that was already struggling to absorb the oil rally, which is exacerbating inflation and fiscal concerns,” the trader noted.
The 10-year Treasury yield rose to its highest level in five weeks, reaching 4.43 percent, and remains around that rate on Thursday.
In addition, the benchmark Brent crude oil contract has surged 70 percent since the onset of the war on February 28, now at its highest point in nearly four years. This increase stems from worries that supply from the critical Middle Eastern production region will remain constrained for an extended period. US President Donald Trump has engaged in discussions with oil companies on mitigating the potential impacts of a lengthy blockade of Iran’s ports. Although a ceasefire has been in place since early April, Iran continues to restrict shipping through the Strait of Hormuz, a vital pathway for approximately 20 percent of global oil supplies.
RATES
India’s overnight index swap (OIS) rates are anticipated to further support paid positions that track US yields and oil prices. The one-year OIS rate closed at 5.99 percent, while the two-year swap rate ended at 6.24 percent. The liquid five-year OIS rate settled at 6.6150 percent.
Published on April 30, 2026.
