Indian government bonds are set to extend their bearish run in early ​deals on Thursday, as a spike in US Treasury yields ‌has added more challenges for a market already ​fighting a relentless surge in oil ⁠prices over the last two months.

US Treasuries witnessed a sharp selloff overnight, with yields rising further in Asian hours after the ‌Federal Reserve left rates unchanged. The decision was its most divided since 1992, with three of ‌12 policymakers dissenting and stating that the Fed ‌should ⁠not show a bias towards easing.

The benchmark ⁠Indian 6.48 per cent 2035 bond yield is expected to drift within the 6.98 per cent-7.05 per cent range, according to a private-bank trader, after closing at 6.9928% ​on Wednesday. Bond yields move ‌inversely to prices.

“Sentiment is clearly defensive as the move in Treasuries is another headwind for a market that was already struggling to digest the oil ‌rally, which is keeping inflation and fiscal worries alive,” ​the trader said.

The 10-year Treasury yield jumped to its highest in five weeks to ⁠hit 4.43 per cent, and stayed around those levels on Thursday.

Meanwhile, the benchmark Brent crude contract has climbed 70 per cent since ‌the war began on February 28 to its highest level in nearly four years, on concerns that supply from the key Middle East producing region will remain bottled up for longer. US President Donald Trump spoke with oil companies about how to mitigate the ‌impact of a possible months-long blockade of Iran’s ports. Though there has ​been a ceasefire since early April, Iran has kept shipping through the Strait of Hormuz, ⁠a conduit for about 20 per cent of global oil supplies, largely ⁠shut.

RATES

India’s overnight index swap rates are set to further encourage paid positions tracking US yields ‌and oil.

The one-year OIS rate ended at 5.99 per cent, while the two-year swap rate closed at 6.24 per cent. The ​liquid five-year OIS rate settled at 6.6150 per cent. 

Published on April 30, 2026