India bonds to come under selling pressure at start of new week as oil spike continues

Business Recorder reported that Indian government bonds could face further selling as elevated oil prices add to inflation concerns. A trader at a primary dealership put the 2036 bond yield in a 7.45% to 7.50% range, following its previous close at 7.4740%. The 10-year benchmark yield climbed 9 basis points on Friday, extending a nine-week rise to 62 basis points, the longest such streak since 1998.

Brent crude rose above $117 per barrel on Friday, reaching a level not seen in almost six months, after attacks in Saudi Arabia raised concerns about supply disruption. It gained 6.2% over the week, its strongest weekly advance since the week ended September 11, before easing slightly in Asian trading on Monday. India imports nearly 90% of its oil, and sustained high prices could affect inflation, the rupee and public finances. The Reserve Bank of India raised its repo rate earlier this month, while markets are pricing in slightly more than 100 basis points of further increases over the next 12 months; the US Federal Reserve decision on Wednesday is also in focus.