Indian government bonds have paused their recent rally, trading in a narrow range as market participants grapple with renewed geopolitical uncertainty.
The benchmark 6.94% 2036 bond yield remained little changed at 6.7670% by 10:15 am, halting a three-session advance that had seen yields fall by 7 basis points.
This consolidation reflects a broader hesitation among investors to take new positions while assessing the impact of escalating tensions between the United States and Iran.
The pause in bond buying coincides with rising volatility across other asset classes.
India's overnight index swap (OIS) rates edged higher, signaling increased short-term funding costs and reflecting the spillover effects from global risk-off sentiment.
The fraying of the US-Iran peace deal has reignited concerns over potential disruptions to global oil supplies, a key driver for inflation expectations and monetary policy outlooks in emerging markets like India.