India bonds gain, swap rates fall on dovish RBI comments, oil slide

Indian government bonds rallied with the benchmark 10-year yield falling 5.3 basis points to 6.7832%, its biggest single-session drop since May 25, after RBI Governor Sanjay Malhotra indicated rate hikes were premature. Softer Brent crude prices, down 2 percent to 75.51 dollars per barrel, added further support. OIS rates also fell sharply, with the one-year OIS down 6.25 bps to 5.78 percent and now pricing in only two rate hikes this year, while foreign investors have bought 230 billion rupees of government bonds in June so far, aided by expectations of inclusion in Bloomberg's global bond indices.