India bonds wipe out early gains as oil rebounds
TLT•Indian government bonds gave up early gains as Brent crude rebounded to $105.8 a barrel. The benchmark 2036 bond yield was up slightly at 7.3220% by noon, after falling 4 basis points earlier.
1. Yields reverse early decline
Indian government bonds erased early gains on Tuesday as oil prices rebounded and traders awaited the US midterm election results. The benchmark 6.94% 2036 bond yield was marginally higher at 7.3220% by noon, after falling 4 basis points in early trade; it had dropped nearly 10 basis points in the previous session.
2. Oil and auction in focus
Brent crude climbed to $105.8 a barrel after reports that the United States struck Iran's Qeshm Island, stoking fears of broader escalation and prolonged disruption to regional supply. India, the world's third-largest oil importer, is exposed to higher crude prices, which can worsen inflation, strain the rupee and weigh on the government's fiscal outlook. Traders also awaited a 299 billion rupee ($3.15 billion) state-debt auction.
3. Rates trade mixed
India's overnight indexed swap rates traded mixed. The one-year rate rose about 1 basis point to 6.6675%, the two-year rate edged down to 6.67%, and the five-year rate fell 1.75 basis points to 6.76%.
