India bonds end tad higher on softer oil

Indian government bond prices edged up on Tuesday as lower oil prices supported debt markets, Business Recorder reported. The yield on the benchmark 6.94% 2036 bond fell 1 basis point to 7.3012%, its lowest level since October 9, after touching 7.2780% during the session.

Brent crude had fallen by more than 7% on Monday to $104.80 a barrel, following renewed hopes for a peace agreement, then recovered to about $106 on Tuesday after reports of a US strike on Iran’s Qeshm Island. Profit-taking and caution ahead of US midterm elections limited the bonds’ advance.

The report said softer oil could ease inflation concerns and pressure on India’s debt market, while traders were reassessing the Reserve Bank of India’s expected rate path. Indian overnight indexed swap rates also declined, with the one-year rate down 3 basis points to 6.63% and the five-year rate lower by 5 basis points to 6.7275%.