Indian government bonds are likely to give up the previous session's ​gains in early deals on Friday, pressured by elevated ‌oil prices and rising US Treasury yields, while ​the fresh debt supply will further ⁠test investor appetite.

The benchmark 6.48 per cent 2035 bond yield may move in a 7.00 per cent - 7.06 per cent range, a private bank trader said. ‌It had ended at 7.0203 per cent on Thursday.

Later in the day, New Delhi will raise ‌₹32,000 crore ($3.34 billion) through the sale ‌of ⁠bonds, which includes a new 40-year paper.

"There ⁠should be some selling pressure tracking global factors, but a major spike in yields is unlikely," the trader said.

Rising inflation fears ​continued to drive ‌a selloff in US Treasuries, with the yield on the 10-year paper crossing the crucial 4.50 per cent handle to its highest level in a year.

This week, ‌producer prices posted their biggest increase since ​early 2022, while annual retail inflation rose at its fastest pace in three years, ⁠prompting some Federal Reserve policymakers to warn of potential interest rate hikes.

Oil prices firmed on Friday as ‌ship attacks and seizures exacerbated supply concerns.

For India, which imports nearly 90 per cent of its crude requirements, elevated prices could fuel inflation, pressure the rupee, widen the current account deficit and complicate the government's fiscal calculations.

India raised petrol and diesel prices for ‌the first time in four years by about ₹3 ​per litre, which traders said is unlikely to move the needle and should have ⁠a very limited impact on bonds.

RATES

India's overnight index swap rates ⁠are expected to rise, as fears of imminent rate hikes could discourage receiving.

The one-year ‌swap ended at 6.09 per cent on Thursday, while the two-year rate closed at 6.2725 per cent. The five-year rate ​settled at 6.6075 per cent. ($1 = 95.7625 Indian rupees)

Published on May 15, 2026