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The benchmark 6.94% 2036 bond yield settled at 6.9581% after a volatile session, compared to 6.9452% on Monday. It rose to 6.9653% earlier in the day, its highest intraday level since June 11, before recovering slightly as local banks, led by state-run lenders, likely stepped in to buy on dips, according to traders. Japan’s 30-year high bond yields, hawkish US Federal Reserve policies, and rising crude oil prices are straining global liquidity. These factors exert pressure on Indian equities, challenging investor sentiment despite India’s resilient 7.8% GDP growth. The U.S. 10-year Treasury yield climbed to 4.7860%, its highest since January 2025, as renewed U.S.-Iran attacks lifted oil prices and revived inflation concerns. Brent futures hovered at around $92 a barrel in Asian trade. Higher oil prices have stoked inflation concerns and fiscal risks for India, the world's third-largest oil importer and consumer. Traders consequently ramped up bets on rate hikes by the Reserve Bank of India, pushing borrowing costs higher. India's overnight index swaps are now pricing in at least three hikes over the next 12 months, traders said. India's economy expanded 7.8% year-on-year in April-June, above the 7.1% Reuters poll forecast, strengthening the case for tightening. "It all depends on oil moves now. Rate expectations will increase or decrease accordingly," said Alok Singh, head of treasury at CSB Bank in Mumbai. Foreign investors also turned marginal sellers of Indian bonds last month, posting their first monthly outflow of the financial year. They offloaded 8.5 billion rupees ($89.54 million) of securities under the Fully Accessible Route in August, CCIL data showed. Ample banking system liquidity, however, supported demand, with the surplus swelling to 6.65 trillion rupees on Monday, its highest since April 2022. RATES India's OIS rates edged higher on Tuesday. The one-year swap rate was up 1.5 bps at 6.0150%, and the two-year swap rose 1.75 bps to 6.21%. The five-year rate ended 2 bps higher at 6.5050%. (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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