India bonds skid as crude soars, Treasuries fall

Separately, Indian states are set to sell 153 billion rupees ($1.6 billion) of bonds on Tuesday, which will test market appetite.

India's overnight index swaps also edged higher tracking U.S. yields.

The one-year INR1YMIBROIS=CC rate jumped 3 bps to 5.8075%, while the two-year INR2YMIBROIS=CC rate rose 5.5 bps to 5.99%. The five-year INR5YMIBROIS=CC rate surged 5.25 bps to 6.31%.

The benchmark 10-year U.S. Treasury yield spiked 6 basis points on Monday and added another 1 bp to 4.71% on Tuesday.

India, the world's third-largest oil importer and consumer, is particularly vulnerable to swings in crude prices. Rising U.S. yields also tend to dampen demand for riskier emerging-market debt.

The benchmark 6.94% 2036 Indian bond IN069436G=CC yielded 6.7907% at 11:45 a.m. IST, compared with 6.7643% at Monday's close. Bond yields move inversely to prices.

Investors are now focused on U.S. inflation data due Wednesday as mounting price pressures have lifted the odds of a September Federal Reserve rate hike to 51%, from 44% a day earlier.

India's retail inflation data, also due on Wednesday, is expected to edge up to 4.50% in July from 4.38% in June.

Bank of Baroda economists see food prices as the main upside risk after broad-based increases in July, though softer global gold prices may help contain core inflation.

"Inflation may firm up in the coming months, but the increase is unlikely to be alarming enough to prompt a Reserve Bank of India response," a foreign bank trader said.

The RBI last week cut its inflation forecast in a dovish policy decision, prompting analysts to push back rate-hike calls.