Indian 10-year bond yield surges most in two weeks on US–Iran jitters

Business Recorder reported that India's benchmark 10-year government bond yield jumped on Friday as worries over a possible US military clash with Iran pushed crude oil to its highest level in six months. The 6.48% 2035 bond settled at 6.7214%, adding more than 4 basis points in its largest move in two weeks. Since bond yields move opposite to prices, the rise reflects weaker demand for the debt.

Trump's warning on Thursday, which gave Iran a 10-15 day window to agree a nuclear deal, led Tehran to threaten strikes on US bases in the region if it is attacked. Brent futures touched nearly $72 a barrel, their peak since July 31, adding pressure on India as a major energy importer. Traders also cited a weaker rupee and aggressive paying in overnight index swaps as drags on sentiment.

The selloff deepened after New Delhi sold 330 billion rupees of government bonds, equal to $3.62 billion, at yields 2 to 3 basis points above market levels. That auction pushed the 10-year yield to a session high of 6.7341%. Short-dated OIS rates also rose, with the five-year rate climbing nearly 5.5 basis points to 6.0950%.