Indian bonds rebound as easing Middle East tensions drag oil lower
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The benchmark 6.94% 2036 bond yield was at 6.7767%, as of 10:15 a.m. IST, down from a closing level of 6.8253% on Friday, when it notched a second consecutive weekly rise. "Easing crude prices have provided immediate relief to bonds, and bulls are taking the maximum advantage of this, because it may also proved to be short-lived, considering the recent past," a trader with a primary dealership said. Indian government bonds experienced a significant surge early this week. This rise followed a sharp decline in crude oil prices over the weekend. The easing oil prices offered immediate relief to the bond market. This development also provided potential benefits for the United States economy. India's overnight index swap rates also saw a notable plunge in early trades. Brent crude prices fell 4% in the previous session and extended losses by another 4% in Asian trade on Monday to below $93 per barrel after the United States and Iran paused strikes following two weeks of hostilities. The pause reinforced hopes that shipping through the Strait of Hormuz could gradually return to normalcy. Oil prices had surged in recent days, with the Brent contract hitting $102 last week, as traders gauged prospects of supply disruptions sparked by tit-for-tat between the warring nations. The retreat in oil prices is likely to provide relief to the U.S. economy by easing inflationary pressures and giving the Federal Reserve greater policy flexibility ahead of its interest rate decision on Wednesday. Interest rate futures have assigned a 66% probability of a status quo in this meeting, with market widely expecting a rate hike in September, while the 10-year Treasury yield eased to 4.64%. India also benefits from easing oil prices, as the nation is a major importer and higher energy costs would expand the import bill, fuel domestic inflation and worsen the current-account balance, ultimately pushing up odds of monetary tightening. RATES India's overnight index swap rates plunged in early trades, as traders unwind their recent aggressive paid positions.The one-year swap rate was at 5.89%, while the two-year rate was at 6.10%. The most liquid five-year rate dropped to 6.39%. (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
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