Indian bonds may look to add to their winning momentum in ​opening trades on Tuesday as Brent crude stayed below $100 ‌per barrel, and Treasury yields eased, but the ​focus remains on an escalation between ⁠U.S. and Iran, which could hurt demand.

The benchmark 6.48% 2035 bond yield is expected to move in the 7.00% ‌to 7.06% range, a private bank trader said. It had ended at 7.0270% on ‌Monday.

Bond prices move inversely to yields.

“There could ‌be ⁠some early gains as bulls will ⁠try to push yields further down, but we may see some selling pressure emerging, as oil has seen an uptick after ​news of fresh attacks,” ‌the trader said.

Oil prices rose with the benchmark Brent up over 2% in Asian hours after the U.S. military carried out strikes in southern Iran ‌in what it described as defensive ​actions, keeping markets on edge as a deal to end the war still eludes.

This ⁠comes after U.S. President Donald Trump on Saturday had said that Washington and Iran had largely negotiated ‌a memorandum of understanding on a peace deal that would reopen the Strait of Hormuz.

Analysts have cautioned that even if a deal is finalised, a full recovery in energy flows is unlikely to be immediate and shipping could take months to ‌normalise.

Elevated oil prices impact India’s inflation, current account deficit as ​well as the government’s fiscal math, while adding pressure on the central bank to ⁠hike interest rates.

RATES

India’s overnight index swap rates that are ⁠more sensitive to interest rate expectations could trade with a rising bias, after a sharp ‌drop on Monday.

The one-year swap ended at 6.15%, while the two-year rate closed at 6.35%. ​The five-year rate settled at 6.67%.

Published on May 26, 2026