Indian government bonds surge as crude oil prices decline on optimism surrounding potential U.S.-Iran peace negotiations. The benchmark 6.48% 2035 bond yield fell to 6.9821% from 7.0184%, reflecting improved investor sentiment. Brent crude has eased over 5% since Monday, hovering near $108 per barrel, as markets anticipate resumed Middle East supply flows. Lower energy costs significantly benefit India, the world's third-largest oil importer, by reducing inflation pressures and fiscal deficit concerns. Traders remain cautiously optimistic pending clarity on diplomatic progress. New Delhi's upcoming 340 billion rupee debt sale Friday will introduce a new 10-year benchmark paper, with markets expecting yields approximately 2 basis points lower than current levels. Overnight index swap rates declined as traders unwound heavy positions.
