India bonds to continue winning run but debt auction cutoffs to act as key driver

Mumbai: Indian government bonds are expected to continue their five-day winning streak on Friday due to low oil prices and Treasury yields, which are boosting investor sentiment. The yield on the benchmark 6.94% 2036 bond is expected to stay between 7.12% and 7.18% until a weekly debt auction, according to a private bank trader.

The bond ended at 7.1710% on Thursday, marking a near 25 basis point drop over four days. The Indian government plans to raise 360 billion rupees ($3.81 billion) through the sale of 15-year and 50-year bonds later in the day. While there is room for further rally in the secondary market, sustained moves above 7.15% levels will depend on the auction cutoffs.

Oil prices ticked up on Thursday due to new attacks on tankers, which raised concerns about supply, and as investors reevaluated the US-Iran conflict. However, the benchmark Brent crude contract remained below $100 per barrel, after falling more than 8% to its lowest settlement levels since August. US Treasuries rallied, with the yield on the 10-year note falling to around 4.85%.

The moves were fueled by voter backlash against President Donald Trump's policies, particularly the Iran war's impact on living costs, which led to Democrats' success in the midterm elections. Investors will also be watching India's October inflation data, due next week, to gauge its impact on the Reserve Bank of India's policy decisions, following the oil price decline.