Indian government bonds are likely to be steady in early deals on ​Thursday, with elevated oil prices and US Treasury yields keeping ‌sentiment cautious.

The benchmark 6.48% 2035 bond yield ​may move in a 7.02%-7.08% range, a ⁠private bank trader said. It had ended at 7.0493% on Wednesday.

“We may not see any larger moves in the initial ‌part of the session, as market sentiment remains cautious with a bearish tilt,” the trader said.

US ‌yields stayed elevated, with the 10-year bond ‌yield touching ⁠the crucial 4.50% mark for the first ⁠time in almost a year, after producer prices posted their biggest gain since early 2022 for April.

This comes after annual retail inflation ​rose at its fastest pace ‌in three years, pushing some Federal Reserve policymakers to warn about potential interest rate hikes if price pressures continue to worsen.

Meanwhile, oil prices remained elevated, ‌with talks between the US and Iran at a ​stalemate, while traders pinned their hopes on a meeting between US President Donald Trump ⁠and Chinese President Xi Jinping later in the day, for guidance towards a resolution.

Meanwhile, Iran tightened its control over ‌the Strait of Hormuz, in deals with Iraq and Pakistan to ship oil and liquefied natural gas from the region.

India imports nearly 90% of its crude requirements; elevated prices could fuel inflation, pressure the rupee, widen the current account deficit and complicate ‌the government’s fiscal calculations.

Reserve Bank of India Governor Sanjay Malhotra said ​this week that monetary policy can look through temporary supply shocks but may intervene if inflation ⁠pressures become entrenched following the oil price spike.

RATES

India’s overnight index ⁠swap rates are expected to be little changed, with traders eyeing developments from the US-China meet.

The ‌one-year swap rate ended at 6.09% on Wednesday, while the two-year swap rate closed at 6.2950%. The ​liquid five-year OIS rate settled at 6.6550%.

Published on May 14, 2026