Indian Bond Yields Rise Amid Oil Spike and Fed Outlook

Indian government bonds traded within a narrow range on July 29, 2026, with the benchmark 6.94% 2036 bond yield climbing to 6.7872%. Market volatility followed a 4.7% surge in Brent crude prices to $87.68 a barrel, triggered by military strikes conducted by the United States and Saudi Arabia against Iran-backed groups in Iraq.

Global pressures are compounding domestic challenges as traders price in a projected 25-basis-point rate hike by the Federal Reserve in September. Internally, India is grappling with tightening financial conditions and inflation that has climbed for eight straight months to 4.38%, surpassing the target of 4% set by the Reserve Bank of India.

Despite these inflationary pressures, analysts from Barclays expect the central bank to maintain a neutral stance and hold the key repo rate at 5.25% during its scheduled policy meeting on August 5.