India bonds poised to gain as oil slips; US midterms in focus

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The benchmark ⁠6.94% 2036 bond yield is seen trading in a 7.35%-7.39% range

By Reuters

Updated - November 02, 2026 at 08:46 AM. | MUMBAI

Indian government bonds are likely to open firmer on Monday. | Photo Credit: iStockphoto

Indian government bonds are likely to open firmer on Monday, as a ​retreat in crude prices eases inflation and rate-hike concerns, though ‌traders await cues from the US midterm elections on ​the trajectory of the US-Iran war.

The benchmark ⁠6.94 per cent 2036 bond yield is seen trading in a 7.35 per cent-7.39 per cent range, a private-bank trader said, after ending at 7.4139 per cent on Friday.

The ‌10-year yield fell about 6 basis points last week, following a more than 70-bps surge over ‌the preceding 10 weeks, its longest such streak ‌since ⁠at least 1998, the earliest available LSEG data ⁠shows.

Brent crude futures retreated from six-month highs to around $111 a barrel in Asian trade after Iranian and Qatari officials held a third consecutive ​day of talks aimed ‌at securing a deal to end the conflict.

The negotiations come amid concerns the war could flare up again after the November 3 US midterm elections.

President Donald ‌Trump has said the United States will ​not launch fresh attacks on Iran before the vote and described talks with Tehran as productive, ⁠while stopping short of ruling out military action afterward.

Opinion polls indicate Democrats could regain control of the House of Representatives ‌and possibly the Senate, as voter discontent grows over inflation stoked by Trump's tariffs and the war.

"Lower oil prices could extend short-covering in bonds, but a durable rally is unlikely until the midterm elections offer greater clarity on the war and its implications for oil," ‌the private-bank trader said.

LIQUIDITY ALSO IN FOCUS

Tight banking system liquidity may ​cap demand for debt. It was near neutral at 304 billion rupees on Thursday.

"India rates ⁠remain under pressure from a sharp tightening in domestic liquidity ⁠conditions, increasingly amplified by the RBI's efforts to manage INR volatility," DBS Bank said in a note.

RATES

Overnight ‌indexed swap rates are also likely to soften.

On Friday, the one-year OIS ended at 6.72 per cent, the two-year ​at 6.74 per cemt, and the five-year at 6.86 per cent.

Published on November 2, 2026

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