Indian bonds rebound as easing Middle East tensions drag oil lower

Indian government bonds rebounded sharply as easing Middle East tensions dragged crude oil prices lower, with Brent crude falling around 4 percent in Asian trade on Monday to below USD 93 per barrel after the US and Iran paused strikes. The benchmark 6.94 percent 2036 bond yield eased to 6.7767 percent from 6.8253 percent on Friday, while overnight index swap rates also plunged, with the one-year rate at 5.89 percent, two-year at 6.10 percent, and five-year at 6.39 percent. Lower oil prices are expected to ease inflationary pressures, reduce India import bill, and improve current-account dynamics.