India bonds set to rally along Treasuries as Democratic win drives oil to two-month low

Indian government bonds were expected to rise on Thursday, following gains in US Treasuries after Democrats won both chambers of Congress, Business Recorder reported. The result lifted expectations of lower US fiscal spending and a faster end to the Iran war, while Brent crude fell 8% on Wednesday to its lowest level in more than two months and slipped to $93.70 a barrel in Asian trading.

The US 10-year Treasury yield fell 4 basis points to 4.85% in Asian trade, after dropping 6 bps a day earlier. For India, the report said lower oil prices could reduce imported inflation risks and pressure on government finances; the 6.94% 2036 bond yield had declined more than 11 bps to 7.1880% on Wednesday. Traders were also watching for India’s October inflation figures, due next week, and their implications for the Reserve Bank of India’s policy outlook.