Indian government bonds are set to give up some gains from the ​previous session in early deals on Thursday after comments from the ‌United States and Iran showed that peace was ​not a done deal for now, keeping ⁠Brent crude above $100 per barrel.

The benchmark Indian 6.48% 2035 bond yield is expected to drift within the 6.90%-6.95% range, according to ‌a trader with a private bank, after closing at 6.9219% on Wednesday.

The yield posted its biggest single-day ‌decline in four weeks on Wednesday. Bond yields ‌move ⁠inversely to prices.

"The continuous back and forth ⁠in the U.S.-Iran issue has been a major pain point rather than the war itself, and we should see some of the gains ​getting washed away today," ‌the trader said.

Oil prices rose in Asian hours on Thursday after U.S. President Donald Trump said it was "too soon" for face-to-face talks with Tehran, while a senior Iranian ‌lawmaker said the U.S. proposal was more of ​a wish list than a reality.

The benchmark Brent crude was around $101 per barrel, after hitting ⁠a two-week low on Wednesday.

Iran was reviewing a U.S. peace proposal that sources said would formally end the war ‌while leaving unresolved the key U.S. demands that Iran suspend its nuclear program and reopen the Strait of Hormuz.

Even as a ceasefire prevails, the strait, which carries about one-fifth of the world's oil and natural gas supply, has been mostly shut since the war began on ‌February 28.

Market participants also await the auction of a new ​10-year debt on Friday, with New Delhi looking to raise 340 billion rupees ($3.59 billion) through this note, ⁠which will replace the existing benchmark paper in the coming ⁠weeks.

RATES

India's overnight index swap (OIS) rates may rise after heavy receiving interest on Wednesday.

The one-year OIS rate ‌ended at 5.90%, while the two-year swap rate closed at 6.10%. The five-year rate settled at 6.4950%, all down ​by 14-18 bps.

Published on May 7, 2026