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The benchmark 6.94% 2036 bond yield climbed 6 basis points to end at 7.1067%, its highest level since May 21, after closing at 7.0447% on Wednesday. Bond yields move inversely to prices. US Treasury yields surged to their highest levels since 2007 on Wednesday, after a robust purchasing managers' report reignited fears of stubborn inflation. Indian government bonds experienced a decline following increases in U.S. Treasury yields and oil prices. The benchmark 6.94% 2036 bond yield rose to its highest level since September. Higher oil prices intensified inflation worries ahead of the Reserve Bank of India's monetary policy meeting. Market participants anticipate a repo rate hike on October 7 due to economic conditions. Meanwhile, the benchmark Brent crude contract extended gains in Asian hours as diplomatic talks between the US and Iran showed little sign of progress. India's reliance on imports for roughly 90% of its crude oil needs makes it particularly exposed to swings in global oil prices. Higher crude prices are feeding into inflation worries and raising expectations of a rate hike and potentially further hawkish action by the Reserve Bank of India at its next monetary policy announcement on October 7. "Liquidity conditions have tightened meaningfully following the central bank's sustained liquidity absorption," said Radhika Rao, a senior economist at DBS. "The RBI's inflation mandate has likely reinforced the push to drain excess liquidity, with the odds of a rate hike at the October meeting on the rise." Policy tightening bets in India hardened after August retail inflation came in at 4.82% and the Fed raised interest rates by 25 basis points last week. Most market participants now expect a repo rate hike by the RBI, with several forecasting a terminal repo rate of 6.00%, from 5.75% earlier. RATES Overnight indexed swap rates surged, led by the longer end, moves in which are generally dominated by reaction to oil prices and US Treasury yields. The one-year rate ended at 6.16% and the two-year rate closed at 6.36%. The liquid five-year rate jumped 9 bps to settle at 6.6350%. (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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