Indian government bonds are expected to inch lower in early deals ​on Monday, as oil prices rebounded amid doubts over ‌the durability of a temporary truce between the ​U.S. and Iran.

India’s benchmark 6.48 per cent 2035 ⁠bond yield is expected to drift in a 6.88 per cent-6.94 per cent range, a private-bank trader said. It settled at 6.9049 per cent on Friday.

“Such ‌a flip-flop between the warring countries is not good for anyone, and till the ‌time oil does not stabilise at a particular ‌level, ⁠there would be volatility in bond ⁠yields,” the trader said.

Oil prices rebounded more than 6 per cent on Monday after tumbling more than 9 per cent on Friday on news that ​the Strait of Hormuz ‌is closed again after both the U.S. and Iran said the other party violated their ceasefire deal by attacking ships over the weekend.

The U.S. military ‌had seized an Iranian cargo ship that tried ​to run its blockade, President Donald Trump said on Sunday, while Iran said it ⁠would not participate in a second round of peace talks despite Trump’s threat of renewed air strikes.

The U.S.-Israeli ‌war with Iran has turned out to be the largest-ever disruption of global energy supplies, following Iran’s closure of traffic through the Strait of Hormuz, which typically carries about 20 per cent of the world’s oil and liquefied natural gas flows.

Higher oil prices are ‌detrimental to India, which relies heavily on imports to meet ​its energy needs, and have pushed up bond yields and dragged the local currency ⁠lower since the war started on February 28.

RATES

India’s overnight index ⁠swap rates are also expected to trade with a paying bias.

The one-year OIS rate ‌ended at 5.8075 per cent on Friday, while the two-year swap rate settled at 6.01 per cent. The liquid five-year rate ​rose nearly 3 bps to 6.3925 per cent.

Published on April 20, 2026