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Brent crude neared $110 a barrel in Asian trade, before easing to around $103. Prices gained more than 7.5% this week as attacks on key Middle East shipping routes raised fears of prolonged supply disruptions. The oil rally rattled global debt markets, driving the U.S. 10-year Treasury yield toward 5% as investors repriced inflation risks and the likelihood of a near-term U.S. rate hike. Indian government bonds experienced a sharp decline in early trading on Friday. The benchmark ten-year bond yield climbed past seven percent, reaching a three-month high. This downturn occurred as rising oil prices and elevated US Treasury yields impacted investor sentiment. Brent crude oil surpassed one hundred eight dollars per barrel during this period. Simultaneously, the ten-year US Treasury yield hovered around four point nine seven percent. The yield on India's benchmark 6.94% 2036 bond jumped 5 basis points to 7.0233%, its highest in more than three months. It added 6 bps this week, extending losses into a fourth straight week. The five-year bond led the selloff, with its yield up 10 bps on the day at 6.6202%. Pressure rose further after RBI Governor Sanjay Malhotra said the central bank could use any liquidity tool, including bond sales and FX swaps, to absord the 10-trillion-rupee plus liquidity surplus and keep the overnight rate aligned with the repo rate. "Any measures to absorb excess liquidity through VRRR operations, FX swaps, OMOs or reserve requirements could influence the near-term trajectory of bond yields," Axis Mutual Fund said in a note. The RBI also partially cancelled an auction of shorter-dated government bonds for the first time in a year, signalling concern over rising borrowing costs, traders said. Investors now await U.S. inflation data later on Friday, India's inflation reading on Monday and the Federal Reserve's policy decision next week for further cues. RATES Overnight indexed swap rates surged along with bond yields, with traders saying markets were increasingly pricing in an RBI rate hike as early as October. This week, the one-year rate added 4 bps to 6.03%, the two-year rose 6 bps to 6.24%, and the liquid five-year jumped to 6.57%, up 10.5 bps. (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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