Oil pain pins India bonds in range; RBI minutes to give next cue
MUMBAI: Indian government bonds stayed pinned in a narrow range on Wednesday, as higher oil prices blunted support from softer U.S. Treasury yields, with traders awaiting the U.S. and local central banks’ latest policy minutes for direction. Global bond yields steadied on Wednesday, holding near multi-decade highs hit in the previous session as swelling government debt and geopolitical risks kept…
Mumbai saw Indian government bonds remain stagnant in a narrow range on Wednesday, as surging oil prices hindered gains from a slight easing of U.S. Treasury yields, pending the release of minutes from the U.S. and local central banks. Global bond yields paused near multi-decade peaks reached the day before due to mounting public debt and international tensions weighing on markets.
The 10-year U.S. Treasury yield decreased by approximately 1.5 basis points to 4.69% in Asian trading hours, mildly alleviating pressure on domestic debt, but the increase in crude oil prices counteracted this in the latter half of the session. The Indian benchmark 6.94% 2036 bond yield closed at 6.8170%, unchanged from the previous day after climbing in the two sessions prior.
Brent crude futures rose for the fourth consecutive day, nearing $92 a barrel, following U.S. President Donald Trump's announcement that no discussions were taking place with Iran. India's oil consumption accounts for 90% of its needs, and the escalating oil prices pose risks to its currency, economic growth, fiscal health, and inflation levels.
The rupee plummeted to a late-July low of 95.7525 per dollar, while the benchmark Nifty 50 index extended its seven-day decline, the longest streak in 11 months. "Follow the oil," said Alok Singh, head of treasury at CSB Bank in Mumbai, emphasizing that the price of crude remains the primary obstacle to bond performance, even as surplus liquidity, better monsoon prospects, and contained inflation bolster market sentiment.
The Reserve Bank of India (RBI) abruptly ended its discounted swap window for hedging diaspora deposits early, shifting global attention back to oil and U.S. Treasury yields. Traders anticipate the upcoming policy minutes from the RBI and the Federal Reserve later in the day, closely monitoring them for further guidance on market direction.
Overnight indexed swap rates in India fluctuated, searching for additional cues, with the one-year swap declining 1.75 basis points to 5.8075% and the two-year swap remaining steady at 6.0475%. The five-year liquid rate slipped 2.25 basis points to 6.3975%.
Written by urgent.news from Business Recorder's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
