India bonds jump ahead of auction as oil erases war-led gains

Indian government bonds rallied, with the benchmark 6.94% 2036 yield dropping 2 basis points to 6.7648%, supported by a fall in Brent crude to $72.24 amid resumption of shipping through the Strait of Hormuz. Foreign investors bought a net 236 billion rupees of Indian government bonds so far in June, on track for the highest monthly inflow in two years, while overall Asian bond inflows hit a three-month high of $5.61 billion in May. Rate expectations eased further after RBI Governor Sanjay Malhotra called talk of rate hikes premature, dragging one-year OIS rates down to 5.75%.