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Brent crude surged to $102 a barrel in Asian trade after the United States and Iran struck more tankers near the Strait of Hormuz, escalating supply concerns that contributed to an extended global debt selloff. The U.S. 10-year Treasury yield climbed 3 bps to 4.8650% on Thursday, its highest since November 2023. Germany's 10-year yield reached its highest in more than 15 years, while Japan's equivalent bond yield pushed back toward a peak last seen in September 1996. Bond yields rise when prices fall. Indian government bonds weakened for a second day on Thursday. Rising U.S. Treasury yields and crude prices above $100/barrel fueled inflation concerns. Higher oil prices threaten India's import bill and government finances. The rupee also slipped for a fifth day against the dollar. Focus remains on upcoming inflation prints and the Fed's policy decision. Indian bonds also fell, but remained comparatively insulated. The benchmark 6.94% 2036 bond yield rose nearly 2 basis points to 6.9762% on Thursday, its highest in over three months. A banking-system liquidity surplus of 10.5 trillion rupees curbed the scope for heavy selling, traders said. Indian debt has outperformed most global peers since the U.S.-Iran war began in February, LSEG data shows, aided by the Reserve Bank of India's dollar-attracting measures. Yet risks remain skewed toward higher yields as the liquidity glut in India's banking system may be concealing an otherwise bearish market bracing for tighter monetary policy, traders said. Investors await U.S. inflation data on Friday and have an eye on Indian inflation as well as the Federal Reserve's policy decision next week. A Reuters poll showed most economists expect the Fed to hold rates at its Sept. 15-16 meeting and through year-end. Attention is also turning to the RBI's liquidity-draining tools. Traders said the central bank likely conducted near-maturity dollar-rupee sell-buy swaps for a second day on Thursday and may rely further on such swaps after variable-rate reverse repos failed to keep call rates within the policy corridor. Some are betting that a cash reserve ratio hike may also be on the cards. RATES Overnight indexed swap rates rose, though paying interest stayed contained. The one-year rate added 1.5 bps at 6%, the two-year rose 2.5 bps to 6.2050%, and the five-year jumped 4 bps to 6.52%. (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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