Here are a few details:

The two-year yield, the one most sensitive to BOJ policy rates, added 0.5 basis point (bp) to 1.650%, the highest since May 1995. Yields move inversely to bond prices.

The five-year yield advanced 1.5 bps to a record high of 2.135%, extending its streak of gains to five sessions.

The benchmark 10-year JGB yield climbed 0.5 bp to 2.875%.

Three sources familiar with the BOJ’s thinking said the central bank is set to raise interest rates as soon as September and is considering accelerating the pace of hikes thereafter.

“Speculation about an early interest rate hike by the Bank of Japan continues to weigh on the market,” Takayuki Miyajima, senior economist at Sony Financial Group, said in a note.

Japan may signal the chance of faster-than-expected interest rate increases to stem the yen’s decline, Tokyo’s former top currency diplomat Mitsuhiro Furusawa told Reuters.

Data on Thursday showed Japan’s July producer price index rose 7.2% year-on-year, slightly below forecasts but still elevated enough to reinforce expectations for a rate hike.

JGBs rose earlier in the session, tracking gains in US Treasuries after tame producer price data cooled expectations for a Federal Reserve rate hike next month.‑Reuters

The yield on the benchmark 6.94% 2036 bond was at 6.7511% as of 10:00 a.m. IST, after closing at 6.7582% on Thursday.

Bond yields move inversely to prices.

New Delhi will raise 320 billion rupees ($3.35 billion) through a bond sale later in the day, including two new securities that will mature in three years and seven years.

“Market has been taken over by the bulls, as we witnessed yesterday, but the major question still remains, are there enough buyers for the 10-year bond yield to break past 6.75% mark,” a trader said.

Oil prices eased in the previous session and hovered around those levels in Asian trade on Friday as traders weighed growing signs of softer global demand against a sharp increase in US crude stockpiles. Brent crude slipped below $87 a barrel after the US Energy Information Administration reported that commercial crude inventories recorded their largest weekly rise since January 2023.

The decline in oil prices is positive for India, the world’s third-largest crude oil importer, as lower import costs can help ease inflationary pressures and improve the fiscal outlook.

Meanwhile, US Treasury yields also edged lower, with the benchmark 10-year yield hovering near 4.65%, after July producer-price data suggested inflationary pressures at the wholesale level remained contained, prompting investors to scale back rate-hike expectations in September.

The five-year yield was unchanged at 2.105%.

It rose to a record high of 2.12% in the previous session.

The two-year yield, most sensitive to Bank of Japan policy rates, was flat at 1.64%, its highest level since May 1999.

Yields move inversely to bond prices.

“The yen has weakened against the dollar in the latest sessions, so the market pricing for the September rate hike remains strong,” said Shuichi Ohsaki, a senior portfolio manager at Meiji Yasuda Asset Management.

“The market now cares about the pace of the BOJ’s rate hike rather than where the terminal rate is.

The September rate would come a hike in June, that’s once every three months,“ said Ohsaki.

The expectations for the September rate hike grew after a joint currency intervention between Japan and the United States at the end of last month lifted the yen’s value, raising bets that the BOJ would have to raise rates soon to keep the yen’s momentum.

The market sees a 95% chance for the BOJ to raise policy rates by 25 basis points to 1.25% by its October policy meeting, while swap rates indicate about a 50% chance for another hike to 1.5% at its December meeting.

The 10-year JGB yield rose 2 bps to 2.87%.

The 30-year yield rose 1 bp to 4.000%, reflecting worries about Japan’s fiscal health.

“The yen may not strengthen even as the BOJ raises policy rates in September, as the market remains concerned about government spending, such as a massive stimulus plan and the food tax cuts, Ohsaki said.

The 20- and 40-year bonds have not been traded as of 0445 GMT.

Markets were also focused on the US Consumer Price Index, due later on Wednesday, for clues on the direction of Federal Reserve interest rates.

The benchmark 10-year JGB yield rose 4.5 basis points (bps) to 2.850%. Yields move inversely to bond prices.

The 5-year yield rose 2.5 bps to 2.110%, a record high.

The 2-year yield, the most sensitive to Bank of Japan policy rates, increased 3.5 bps to 1.645%, the highest since May 1995.

Traders are increasingly pricing in the possibility of another BOJ rate hike in September, earlier than the previously expected December timing, which would have marked six months since the last rate increase in June.

The shift follows recent Japan-US joint currency intervention to support the yen and what was seen as a hawkish tone in the BOJ’s July meeting summary of opinions.

The summary of opinions released on Monday “gave an impression that policymakers are positive about deciding on a rate hike at the September meeting,” Barclays chief Japan economist Naohiko Baba said in a note.

Markets were pricing in a 78% chance of a September move as of midday Tuesday, up from 66% on Monday afternoon, according to Tokyo Tanshi data.

The 20-year JGB yield climbed 3 bps to 3.715%.

The 30-year yield added 4 bps to 3.990%. Oil prices ticked higher on Wednesday after Iran’s top security official said that the vital Strait of Hormuz shipping route will remain closed unless the United States accepts Iran’s conditions to end the war and after the US and Yemen’s Iran-aligned Houthis reported separate attacks on shipping.

Brent crude futures rose 0.74% to $89.57 a barrel, while US crude was up 0.76% to $83.84.

The yield on the benchmark 6.94% 2036 bond is expected to trade in the 6.76% to 6.80% range, according to a trader at a private bank, after closing at 6.7791% on Tuesday. Bond yields move inversely to prices.

“After some recovery in late trading yesterday, it is clear that the benchmark yield may not be able to break above 6.80% in a sustainable manner, so we are in for a range-bound session today, with the focus on inflation,” the trader said.

India’s retail inflation data is due later in the day.

A Reuters poll expects inflation to accelerate to 4.50% in July from 4.38% in June.

The benchmark Brent crude contract stayed around the $90 per barrel mark in Asian trading after jumping by nearly 6.5% in the last two sessions, amid rising doubts over a peaceful settlement between the US and Iran, who have been at war for the last five-and-a-half months.

Elevated oil prices could stoke inflation and strain the fiscal balance, current account and currency in India, the world’s third-largest crude importer.

Traders are more likely to react to US inflation data, which will be out after Indian market hours.

Rising price pressures in the US have led the implied probability of a rate hike by the Federal Reserve in September to an even chance, with the 10-year Treasury yield hovering around the 4.70% mark.

Vietnam raises $396mn in government bond auction

The uptake was also higher, with 58% of the bonds on offer sold, compared with 55% last week, according to a Hanoi Stock Exchange filing.

Brent crude was up slightly in Asian trade after having risen 5% on Monday to $87.70 a barrel.

Washington rebuffed Tehran’s peace proposal with new demands, dimming hopes of an end to the war and raising supply concerns.

The benchmark 10-year US Treasury yield spiked 6 basis points on Monday and added another 1 bp to 4.71% on Tuesday.

India, the world’s third-largest oil importer and consumer, is particularly vulnerable to swings in crude prices.

Rising US yields also tend to dampen demand for riskier emerging-market debt.

The benchmark 6.94% 2036 Indian bond yielded 6.7907% at 11:45 a.m. IST, compared with 6.7643% at Monday’s close.

Bond yields move inversely to prices.

Investors are now focused on US inflation data due Wednesday as mounting price pressures have lifted the odds of a September Federal Reserve rate hike to 51%, from 44% a day earlier.

India’s retail inflation data, also due on Wednesday, is expected to edge up to 4.50% in July from 4.38% in June.

Bank of Baroda economists see food prices as the main upside risk after broad-based increases in July, though softer global gold prices may help contain core inflation.

“Inflation may firm up in the coming months, but the increase is unlikely to be alarming enough to prompt a Reserve Bank of India response,” a foreign bank trader said.

The RBI last week cut its inflation forecast in a dovish policy decision, prompting analysts to push back rate-hike calls. Separately, Indian states are set to sell 153 billion rupees ($1.6 billion) of bonds on Tuesday, which will test market appetite.

Germany’s 10-year bond yield rose 2 basis points to 3.198%, after climbing 5 bps on Monday on the back of rising oil prices. Yields rise as prices fall and vice versa.

Trump on Monday said Iran should pay compensation for people killed in wars, attacks and protests, in response to Tehran’s demands for compensation and an end to sanctions.

Iran earlier on Monday said it was nearing a final pact with Oman defining new shipping lanes through the Strait, but repeated that the US must meet conditions, including compensation, before opening the key energy waterway.

Oil prices ticked slightly higher on Tuesday, with Brent crude up 0.5% at $88.20 after rising 5% on Monday as the prospect of a near-term Hormuz deal slipped away.

Germany’s 2-year bond yield, which is sensitive to European Central Bank rate expectations, rose 2 bps to 2.809% after rising 5 bps on Monday.

“We are back to the situation where there is no war ongoing, but the Strait of Hormuz remains closed,” Mohit Kumar, a senior European economist at Jefferies, said.

“The longer the Strait is closed, more inventories will be depleted and greater would be the impact on oil prices.”

Traders in money markets were last pricing in 41 bps of further ECB monetary tightening this year, up from 37 bps late on Friday.

Bond markets were also waiting for Wednesday’s US CPI inflation report, which will influence the Federal Reserve’s rate decisions and have knock-on effects for bond markets around the world. Italian and French 10-year bond yields were both up 3 bps.

BTr fully awards 30 billion pesos ($491.67 million) offer at an average rate of 7.182%.

Tenders total 51.9 billion pesos.

The yield on the benchmark 6.94% 2036 bond is expected to trade in the 6.75% to 6.79% range, according to a trader at a private bank, after closing at 6.7651% on Thursday.

Bond yields move inversely to prices.

US Treasury yields fell on Friday after data showed that employers unexpectedly shed 23,000 jobs in July, against analyst expectations of a rise of 80,000 jobs, indicating signs of weakness in the economy.

The unemployment rate eased to 4.1% as labor participation fell, defying expectations for the rate to remain steady at 4.2%.

This prompted traders to cut odds of a Federal Reserve interest-rate hike in September to 42%, from 55% before the data release and 67% last week.

“There should be some positive opening, but any major moves are unlikely as we are very close to the key 6.75% levels, which is unlikely to be taken away very easily unless some new development takes place,” the trader said.

Traders are to remain focused on inflation prints from India and the US, both due on Wednesday, and will provide crucial guidance on the interest rate trajectory.

A Reuters poll of 40 economists has forecast that India’s retail inflation rate will rise to 4.50% in July from 4.38% in June.

Underlying sentiment stayed supportive for prices as a dovish local monetary policy has led analysts to push back their calls for rate hikes.

India’s central bank kept the repo rate unchanged last Wednesday but cut its inflation forecast for the year and promised sufficient liquidity for the banking system.

Higher crude prices also pushed the US 10-year Treasury yield up 7 basis points overnight and in Asian trade to 4.68%, reducing the appeal of riskier emerging market debt.

The benchmark 6.94% 2036 bond yielded 6.7869% at 10:40 a.m. IST, 2 basis points above Thursday’s close. It was still set for its first weekly decline in five weeks.

New Delhi will raise 320 billion rupees ($3.36 billion) through a sale of bonds maturing in five years and 40 years later in the day.

“Appetite for the long-term note will be key to watch at the auction, with US-Iran tensions and soaring oil prices stoking fears of higher global rates,” a private-bank trader said.

Benchmark Brent crude contract was last at $83.71, up over $4, or nearly 6% from $79 per barrel on Tuesday.

India is the world’s third-largest importer and consumer of oil.

Higher crude prices could increase its import bill, push up inflation and weigh on the rupee.

The Reserve Bank of India, however, eased immediate inflation concerns in a more dovish than expected policy announcement on Wednesday.

The RBI kept the repo rate unchanged, but cut its inflation forecast for the year, promising sufficient liquidity for the banking system, prompting some analysts to push back their calls for rate hikes.

The central bank’s rate stance and inflows into its foreign-currency scheme for non-residents continue to support short-end demand, traders said.

Oil prices fell below $80 a barrel following news of a proposed deal between Iran and Oman to help end the war that would give Tehran control over marine traffic entering the Gulf through the strait. Lower energy prices limit the risk of a damaging spike in inflation, which hurts bonds.

German 10-year yields traded at 3.11% early on Thursday, up just 1 basis point from Wednesday’s close, as did 2-year yields, which rose 1 bp to 2.72%.

That said, crude futures are some 10% above where they were before the war broke out in late February, while European physical crude prices are still anywhere between 18% and 25% above those levels, which could curtail further rallies in bond prices, analysts said. French government bonds, which have been the poorest performers among the G7 debt markets in the last month, could come under close scrutiny when nearly €13 billion ($15.01 billion) in new debt, split between 10-year nominal bonds and longer green bonds, hits the market later on Thursday.

“OAT spreads widened versus (European government bond) peers of late, suggesting that supply concessions could have played a role.

Once the supply is out of the way, OATs have chances to recover,“ Commerzbank strategist Rainer Guntermann said in a note, in reference to the rise in French borrowing costs as investors demand more return. Unease over European governments’ long-term financing, combined with volatile domestic politics, has undermined French bonds recently.

In the last month, yields on 2- and 10-year bonds have risen far more quickly than those elsewhere.

At 2.908% on Thursday, 2-year OATs are yielding nearly 19 bps more than a month ago, compared with top-performing 2-year US Treasuries, with a rise of 7.1 bps, and a whisker ahead of the 18-bp rise in German Schatz yields in that time.

Benchmark 10-year yields are nearly 18 bps higher than a month ago, compared with just 9 bps for UK gilts, the best-performing bonds in the last month.

The previous 10-year OAT auction in July achieved an average yield of 3.73% for the November 2036 issue and a yield of 3.68% for May 2036 paper.

French 10-year OATs were trading 2 bps higher on the day at 3.912%. Spain also comes to market with some €5 billion spread across 5- and 10-year debt.

The benchmark Indian 6.94% 2036 bond yield is expected to trend in the 6.75% to 6.80% range, according to a trader at a private bank, after closing at 6.7722% on Wednesday.

Bond yields move inversely to prices.

“There is optimism among traders, as crude prices have crashed, and the policy tilt was definitely towards the dovish side. Looking at the governor’s tone, it seems the bar for rate hikes is quite higher,” the trader said.

The Reserve Bank of India held the repo rate as expected, as policymakers awaited clearer evidence on whether higher oil prices from the US-Iran war were feeding into broader inflation pressures.

The central bank cut its forecast for average inflation in the current financial year to 5% from 5.1%.

The forecast for core inflation, which excludes food and fuel, was cut more steeply to 4.3% from 4.7% earlier.

“From a market perspective, the 10-year bond yield is expected to remain range-bound, and the yield curve will remain steep,” said Churchil Bhatt, senior executive vice president-investment, Kotak Life Insurance.

Brent crude stayed below $80 per barrel after tumbling an aggregate of 12% in the last three sessions on hopes of a diplomatic resolution to the US-Iran war.

India is a large importer of crude, and lower prices improve the inflation outlook, as well as the current account deficit.

The 10-year US yield stayed around 4.60% mark ahead of crucial jobs data on Friday.

BTr fully awards 30 billion pesos ($491 million) offer at an average rate of 7.139%.

Tenders total 93.8 billion pesos.

The benchmark 6.94% 2036 bond yield was flat at 6.8346% as of 10:30 a.m. IST.

Indian states will auction 268.50 billion rupees ($2.82 billion) of bonds later in the day.

The RBI is widely expected to leave its key policy rate unchanged on Wednesday, according to a Reuters poll.

“The August policy will take place against continued uncertainty over the West Asia crisis and the monsoon outlook,” IDFC Bank said in a note.

Even so, uncertainty around inflation and growth has eased, with headline CPI inflation for fiscal 2027 running below the bank’s forecast and the RBI’s 5.1% estimate, while risks to the central bank’s 6.6% growth projection are tilted to the upside, the note said.

Oil prices, a key driver for oil-import-dependent India, fell 7% in the previous session but edged higher in Asian trade to $84.8 per barrel, keeping traders on edge.

Indian bonds have faced pressure in recent weeks as the widening US-Iran war lifted crude prices and US Treasury yields, reducing the appeal of emerging-market debt.

Foreign investors, strong buyers over the past two months, turned net sellers late last month and offloaded more than 34 billion rupees of bonds last week.

The outlook for fresh foreign inflows darkened further after Bloomberg Index Services again deferred India’s inclusion in its flagship bond index.

Some support, however, has come from inflows into the Reserve Bank of India’s June foreign-currency deposit scheme for non-resident Indians, which has attracted $36.7 billion so far.

The 10-year JGB yield rose 3 basis points (bps) to 2.850%, after earlier slipping to 2.790%. Yields move inversely to bond prices.

“Appetite for the 10-year bonds was dented because of the uncertainties over sources of funding for the consumption tax, while yields are under upward pressure (because of the Bank of Japan’s possible early rate hike),” said Yuki Kimura, a bond strategist at Okasan Securities.

The auction’s bid-to-cover ratio, a measure of demand, fell to 2.56 times from 3.13 times at the previous sale, the lowest since May 2025.

Its tail, the gap between the lowest and average accepted prices, widened to 0.46, the highest in two years.

A wider tail signals weaker investor demand and indicates that buyers required higher yields.

On Monday, JGB yields rose as some investors took joint intervention by the US and Japan to support the yen as a signal for an accelerated pace of BOJ policy tightening.

Investors also remained concerned over Japan’s fiscal situation after the ruling party approved the government’s plan for a temporary cut in sales tax on food and beverages.

Bond prices were up earlier Tuesday because some investors tried to reduce their short positions ahead of the auction, said Takashi Fujiwara, chief fund manager at Resona Asset Management’s fixed income investment division.

The 20-year JGB yield climbed 1 bp to 3.695%.

The 30-year yield sank 2.5 bps to 3.955%.

The 2-year yield, the most sensitive to BOJ policy rates, was flat at 1.56%.

The 5-year yield was flat at 2.085%.

The five-year yield rose 2.5 bps to a record 2.050%.

The two-year yield, the one most sensitive to BOJ policy, rose 3.5 bps to 1.54%, its highest since May 1995. Yields move inversely to bond prices.

“Japan and the US conducted joint currency intervention, which means Japan is under pressure to support the yen with fundamentals this time, such as with monetary policy,” said Rinto Maruyama, senior strategist of FX and rates at SMBC Nikko Securities.

Japan and the United States conducted coordinated yen-buying intervention and will not hesitate to take further action, Japan’s finance ministry said, confirming a rare bilateral action to halt the yen’s slide to fresh 40-year lows.

A widening rate differential with the US, where the Federal Reserve has dramatically shifted to a more hawkish stance, has been a key factor in the dollar’s rise against the yen.

The BOJ on Friday kept its policy rate steady, but warned for the first time that underlying inflation could exceed its target and said future policy discussions would focus on upside price risks.

“The bond yields did not react to BOJ Governor (Kazuo) Ueda’s comments during his press conference on Friday, which means his comments were short of market expectations for early rate hike as early as September,” Maruyama said.

The benchmark Indian 6.94% 2036 bond yield is expected to hit 6.90% in early deals on Monday, according to a trader at a private-sector bank, after closing at 6.8343% on Friday.

The yield has risen an aggregate of 12 basis points in the last three weeks.

After Indian market hours on Friday, Bloomberg Index Services deferred the inclusion of bonds in its flagship Global Aggregate Index, leaving investors flabbergasted, as they had expected that recent tax changes would help the South Asian nation’s debt gain entry.

The inclusion would have paved the way for dollar inflows into the debt market, which would have helped the country’s local currency, which has stayed under pressure for most of 2026.

“It is an absolute shocker for bonds, as traders had assumed that inclusion is a given after Indian authorities announced a host of changes in June,” the trader said.

Foreign investors net sold bonds under the fully accessible route worth 54 billion rupees ($566.16 million) in the last six sessions, and are set to extend the move this week.

Their net purchases had hit $4.4 billion from June 1, before a fifth of that was reversed.

The Reserve Bank of India’s monetary policy decision is due on Wednesday, when it is widely expected to keep its key interest rate unchanged, according to a Reuters poll, with major focus on guidance and economic projections.

The benchmark Indian 6.94% 2036 bond yield is expected to move in the range of 6.80%-6.84%, according to a trader at a private-sector bank, after closing at 6.8132% on Thursday.

Bond yields move inversely to prices.

New Delhi is due to raise 340 billion rupees ($3.55 billion) through sale of the benchmark note, which will take the outstanding value of this paper to 1.36 trillion rupees.

“We could see some selling initially with traders making space in their portfolios to absorb the new supply, but cutoffs would determine whether we test 6.85% before the central bank decision,” the trader said.

The Reserve Bank of India’s monetary policy decision is due on Wednesday.

It is widely expected to keep its key interest rate unchanged, according to a Reuters poll of economists.

The decision comes after the Federal Reserve held interest rates on Wednesday, though Chair Kevin Warsh said the central bank would remain focused on bringing inflation down, leaving markets uncertain over the policy outlook.

“Watching Kevin Warsh was disappointing as he tried to appear hawkish by saying that 2% inflation target is sacrosanct, but could not explain the reason for not taking any action like hiking rates,” said Sandeep Bagla, CEO, TRUST Mutual Fund.

Meanwhile, the benchmark Brent crude contract traded around $88 per barrel, as market participants digested proposed plans for a Saudi Arabia-led maritime coalition to boost defense cooperation around the Red Sea.

The Fed held rates steady on Wednesday, but three of its 12 voting members favoured a hike, while Chair Kevin Warsh reiterated his commitment to curb inflation without offering clear guidance on the policy path.

The 10-year Treasury yield was up 10 bps since Tuesday at 4.70%.

Higher US rates can dent the appeal of riskier emerging market bonds.

The benchmark Indian 6.94% 2036 bond yield traded at 6.8178% by 10:50 a.m. IST.

It settled at 6.7964% on Wednesday.

Bond yields move inversely to prices.

“With the Fed’s policy decision broadly meeting expectations, focus is now on the RBI’s rate decision due next week and auction supply,” said Debendra Kumar Dash, senior vice president of treasury at AU Small Finance Bank.

The central bank is expected to keep its key interest rate unchanged at 5.25%, according to a Reuters poll of economists.

Escalating Gulf tensions and elevated oil prices further posed risks to India’s inflation, fiscal position, current account and the rupee. Brent crude futures rose above $90 a barrel overnight, after attacks in Gulf widened and the United States resumed strikes on Iran on Wednesday.

Foreign investors have also stayed net sellers of FAR bonds so far this week, owning to oil price spikes and no update on India’s inclusion in the Bloomberg index.

Separately, traders braced for New Delhi’s 340 billion rupee ($3.55 billion) large sale of the 10-year note on Friday.

Here are a few details:

The 10-year JGB yield rose 5.5 basis points (bps) to 2.800%.

The five-year yield rose 4.5 bps to 2.025%. Yields move inversely to bond prices. Yields on the 30-yearUS Treasuries climbed to 19-year highs in Asia on Thursday as doubts over the Fed’s resolve to rein in inflation prompted investors to seek more insurance against inflation risks.

Japan’s two-year yield was flat at 1.47% after an auction for bonds with the same maturity witnessed a moderately firm outcome.

“The auction received decent demand because the yield level was high, and that boosted appetite from banks,” said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management.

The market is gauging the impact on JGBs of the massive earthquake that hit Japan’s southern Kumamoto Prefecture earlier this week.

Yields could go either way, as the damage could lead Japan to issue more bonds to finance reconstruction, while supply chain disruptions could hurt the economy, said Inadome.

The 30-year yield rose 3 bps to 3.960%. ‑Reuters

The benchmark 6.94% 2036 bond yield traded at 6.7613% at 10:30 a.m. IST, after settling at 6.7739% on Monday following its biggest drop in two months. Bond yields move inversely to prices.

Traders will watch cutoffs at states’ 181 billion rupees ($1.89 billion) debt sale later in the day for demand signals and room for yields to fall further.

“A break below 6.75% on the 10-year yield is key, as state-run bank selling may limit further declines,” a private-bank trader said.

State-run banks sold 33.7 billion rupees of bonds on Monday to book profits after buying heavily in recent weeks, CCIL data showed, while demand from foreign lenders and offshore investors remained strong.

Offshore investors bought 4.83 billion rupees of bonds under the fully accessible route on Monday, following their biggest one-day selloff in four months on Friday.

On Tuesday, Brent crude was down 2% at $86.52 a barrel in Asian trade.

President Donald Trump said on Monday the US was having “good talks” with Iran and there was a chance of a deal to end their conflict.

Indian assets are most sensitive to oil price swings as the nation imports about 90% of its crude needs.

US Treasury yields also declined ahead of the Federal Reserve’s policy decision due late Wednesday, where it is expected to hold rates, while money markets are pricing in a high probability of a 25-basis-point rate hike in September.

Higher US rates are a key risk for India as they can narrow the risk premium Indian bonds offer over safer US debt.

BTr fully awards 50 billion pesos ($810.1 million) Tenders total 134.5 billion pesos.

BTr awards 20 billion pesos of 91-day T-bills at avg rate of 5.059% versus previous auction avg of 5.104%.

BTr awards 20 billion pesos of 182-day T-bills at avg rate of 5.671% versus previous auction avg of 5.685%.

BTr awards 10 billion pesos of 364-day T-bills at avg rate of 5.950% versus previous auction avg of 5.966%.

The benchmark 6.94% 2036 bond yield was at 6.7767%, as of 10:15 a.m. IST, down from a closing level of 6.8253% on Friday, when it notched a second consecutive weekly rise.

“Easing crude prices have provided immediate relief to bonds, and bulls are taking the maximum advantage of this, because it may also proved to be short-lived, considering the recent past,” a trader with a primary dealership said.

Brent crude prices fell 4% in the previous session and extended losses by another 4% in Asian trade on Monday to below $93 per barrel after the United States and Iran paused strikes following two weeks of hostilities.

The pause reinforced hopes that shipping through the Strait of Hormuz could gradually return to normalcy.

Oil prices had surged in recent days, with the Brent contract hitting $102 last week, as traders gauged prospects of supply disruptions sparked by tit-for-tat between the warring nations.

The retreat in oil prices is likely to provide relief to the US economy by easing inflationary pressures and giving the Federal Reserve greater policy flexibility ahead of its interest rate decision on Wednesday.

Interest rate futures have assigned a 66% probability of a status quo in this meeting, with market widely expecting a rate hike in September, while the 10-year Treasury yield eased to 4.64%.

India also benefits from easing oil prices, as the nation is a major importer and higher energy costs would expand the import bill, fuel domestic inflation and worsen the current-account balance, ultimately pushing up odds of monetary tightening.

The two-year yield, most sensitive to BOJ’s policy rates, rose 2 basis points to 1.51%, its highest level since May 1995.

The 30-year yield, which reflects inflation worries, rose to as high as 4%, its highest since July 9, and was last up 6.5 bps at 3.980%.

Prospects for a rate hike at the BOJ’s policy meeting in October have increased after a Bloomberg News report that said BOJ officials were open to raising interest rates at a faster pace than the consensus among economists.

The two-year bond yield has risen 8 bps this week, its sharpest weekly jump since mid May.

“The market expectations for the October rate hike might be too high,” said Rinto Maruyama, senior strategist for FX and Rates at SMBC Nikko Securities.

“The central bank needs more time to review the effects of its June rate hike on the economy, such as on higher rates on corporate lending,” said Maruyama.

The Bloomberg report, which did not cite anyone, came after the yen fell to an almost four-decade low against the US dollar, raising concerns on import costs and accelerating inflation.

The BOJ is concerned about the weak yen and its impact on prices, and it would turn hawkish to reverse the trend when necessary, said Maruyama. But such messages would come from public speeches by BOJ top officials or board members, he said.

On Friday, super-long ends sold off more heavily on growing inflation worries after oil prices settled above $100 overnight, steepening the yield curve.

Market players might have sold super-long bonds after the yield curve flattened in the previous session, said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management.

The rise in yields on two- and five-year bonds was capped until recently as their yields had priced in the BOJ’s future rate hike path.

The benchmark 6.94% 2036 bond yield traded at 6.8571% as of 10:30 a.m. IST, after closing at 6.8413% on Thursday.

Earlier in the session the yield hit its highest level in five weeks.

Oil prices surged on Thursday, with Brent crude settling above $100 a barrel for the first time since May after Yemen’s Houthis targeted two Saudi oil tankers in the Red Sea.

The development added a fresh geopolitical risk premium to an oil market already unsettled by disruptions to key shipping routes including the Strait of Hormuz.

“Supply disruptions from the main route, tanker rerouting, higher insurance premiums and longer voyage times will further tighten crude availability, pushing up the prices, even if production remains unchanged,” a trader with a primary dealership said.

The jump in crude prices has rekindled concerns that inflation could prove more persistent than previously expected for both India and the United States.

Those worries pushed the 10-year US Treasury yield to 4.70%, its highest level since January 2025, as investors frontloaded bets on a rate hike from the Federal Reserve.

New Delhi meanwhile will raise 280 billion rupees ($2.90 billion) through a bond auction later in the day, including 170 billion rupees of a new 15-year paper. The yield on this note surged 5 basis points in the when-issued segment, trading at 7.05% on Friday.

Here are a few details:

The two-year yield, the one most sensitive to BOJ policy rates, rose 5 basis points (bps) to 1.49%, its highest level since May 1995.

The 10-year JGB yield rose 2.5 bps to 2.76% and the five-year JGB yield rose 4 bps to 2%.

The two-year bond yield jumped in the previous session after a Bloomberg News report that BOJ officials were open to raising interest rates at a faster pace than the consensus among economists.

“The prospects that the BOJ may raise its policy rate in October have increased,” said Masahito Sugawara, a senior strategist at Daiwa Securities.

Swap rates indicate about an 80% chance of a 25-bp increase to 1.25% in October, up from around 70% until the previous session, Sugawara said.

The Bloomberg report came after the yen fell to an almost four-decade low against the US dollar on Wednesday.

“The driver of the dollar’s strength is not just the yen’s weakness, but also other factors such as the rise in oil prices and bets for Federal Reserve rate hikes,” said Sugawara.

“Under this circumstance, the currency intervention would now work, therefore, the BOJ might have signalled its intention to raise rates faster to stem the weak yen,” he said.

The JGB yields rose as supply pressure eased after a round of bond auctions for July completed with the 40-year bond sale on Wednesday, which drew stronger demand than the market had expected.

The benchmark 6.94% 2036 bond yield is likely to move in a range of 6.78% to 6.83%, a trader with a private-sector bank said.

The yield settled at 6.8012% on Wednesday.

“Slowly but surely, bears are now taking control of the market, and we could see a test of 6.85% again, if things persist in the similar manner,” the trader said.

Brent crude futures crossed $96 per barrel in Asian hours, their highest in more than six weeks, with the United States launching a new round of strikes on Iran and Yemen’s Houthis targeting oil tankers in the Red Sea.

The US military said it carried out a 12th consecutive night of attacks on Iran hours after US President Donald Trump vowed to destroy an Iranian bridge or power plant every time Iran shoots at a ship in the Strait of Hormuz.

The rising attacks could further disrupt energy supplies, threatening to deepen the shortfall in global markets triggered by the closure of the Strait of Hormuz, which used to transit nearly a fifth of global supply before the war.

India, the world’s third-largest oil importer, is vulnerable to any supply shock as higher crude prices can swell its import bill, push up inflation and pressure the rupee.

The rupee fell 0.3% on Wednesday to 96.5650 per dollar, its lowest level in two months, and within striking distance of the record low hit on May 20.

The benchmark 6.94% 2036 bond yield settled 1 basis point higher at 6.8012%, holding firm at its highest level since June 24.

Benchmark Brent crude rose 3.3% to a six-week high of $94 a barrel in Asian trade, as supply fears intensified.

U.S. forces struck Iranian military targets for an 11th straight night while three Saudi crude carriers bound for China and India diverted from the Red Sea following warnings from Houthi militia.

Indian assets are highly sensitive to oil swings as the country imports about 90% of its crude needs. The rupee weakened to a two-month low of 96.5650 per dollar on Wednesday and benchmark equities logged their biggest daily loss in two weeks.

For bonds, likely value buying from state-run banks limited some of the losses, with investors betting on a possible resolution to the U.S.-Iran conflict after signs that both sides were open to talks.

Overseas investors have also remained strong buyers, purchasing $4.3 billion worth of bonds under the Fully Accessible Route since June 1. The pace of the inflows is expected to slow after the buying spree, analysts said.

If the index provider announces India will be included in Bloomberg’s global bond index, small quantums of overseas inflows will continue ahead of the inclusion, expected in fiscal 2028, according to Gaura Sen Gupta, chief economist at IDFC First Bank.

Rates

Overnight index swaps extended their climb on oil surge, tighter liquidity.

The one-year swap ended at 5.9950%, 2.5 bps higher, the two-year rose 4 bps to 6.1750%, and the five-year jumped 3.75 bps to 6.475%.

Here are a few details:

The benchmark 10-year JGB yield climbed 3 basis points (bps) to 2.750%.

The five-year yield increased 2.5 bps to 1.965%.

Yields move inversely to bond prices. JGB yields tracked a global move higher after US Treasury yields hit a two-month peak and euro zone yields edged up, as escalating US-Iran tensions lifted oil prices and revived inflation and rate-hike worries in major bond markets.

In an economic blueprint finalised on Tuesday, Prime Minister Sanae Takaichi’s administration said it will work with the private sector to funnel investments worth more than 370 trillion yen ($2.28 trillion) into targeted industries through fiscal 2040.

“Rising crude oil prices driven by escalating tensions in the Middle East are pushing up inflation expectations,” Takayuki Miyajima, senior economist at Sony Financial Group, said in a note.

“There remains deep-seated concern that the government’s ‘responsible, proactive fiscal policy’ may lead to increased government bond issuance and fiscal expansion in the future.”

The Ministry of Finance sold about 300 billion yen in 40-year JGBs on Wednesday.

The sale’s bid-to-cover ratio, a measure of demand, rose to 2.82, the highest since March 2025.

Market participants remained focused on the Bank of Japan’s next policy meeting, with expectations firming for the central bank to keep rates on hold next week but potentially signal a faster pace of tightening as inflation risks persist.

The 20-year JGB yield climbed 3 bps to 3.630%.

The 30-year yield added 0.5 bp to 3.890%, while the yield on the 40-year JGB, Japan’s longest tenor, rose 1 bp to 3.9%. ‑Reuters