Indian government bonds extended their rally for a fifth consecutive session on Monday, driven by a fragile ceasefire between the United States and Iran that has significantly reduced near-term geopolitical risk premiums.
The 10-year benchmark yield has declined by more than 22 basis points throughout June, reflecting a broad shift in market sentiment as investors digest the halt in military strikes.
This repricing comes as crude oil prices have fallen by over 20%, alleviating inflationary pressures that had previously weighed on the bond market.
This repricing comes as crude oil prices have fallen by over 20%, alleviating inflationary pressures that had previously weighed on the bond market.
The market move underscores the sensitivity of emerging-market fixed income to Middle East stability.
With the immediate threat of supply disruption receding, demand for safe-haven assets within the region has softened, allowing yields to compress.
However, the rally has faced headwinds from domestic weather concerns.