Bonds remain stable, and traders watch the US-Iran conflict for clues.

On March 5, bonds began trading steadily as traders monitored the US-Israel-Iran conflict, which has enveloped the entire Gulf region, and the Reserve Bank of India probably interfered in the market. After rising 5 basis points during a tumultuous session on March 4, the benchmark 10-year yield stabilized at 6.6704 percent against the previous close of 6.6732 percent. Later in the day, it rebounded. The world's most significant oil import route, the Strait of Hormuz, remained closed as the conflict between the United States, Israel, and Iran reached its sixth day, with both sides digging in. The benchmark Brent crude was trading at $83.61 per barrel. Since the US and Israel began attacking Iran on February 28, fears of a protracted closure have caused petroleum prices to rise by more than 10%. According to dealers, the RBI and state-owned banks are thought to have interfered by buying bonds to protect the psychological level of 6.7 percent. Bond markets remained largely stable as investors kept a close watch on the escalating tensions between the United States, Israel, and Iran. The conflict has created uncertainty in global financial markets, particularly because the Strait of Hormuz—one of the world’s most important oil transport routes—has been affected. Any disruption in this region can significantly impact global oil supply and prices, which in turn influences inflation expectations and bond market movements. Rising crude oil prices have become a key concern for investors. Since India is heavily dependent on oil imports, higher oil prices could increase the country’s import bill and put pressure on inflation. This situation makes bond traders cautious because higher inflation expectations can push bond yields upward and influence future monetary policy decisions. Market participants also believe that the Reserve Bank of India may have intervened in the bond market to maintain stability. Reports suggest that the RBI, along with state-run banks, may have purchased government bonds to keep the benchmark 10-year yield near the psychological level of 6.7 percent and prevent excessive volatility in the market. Going forward, traders are expected to closely monitor geopolitical developments, crude oil price trends, and signals from central banks. Any escalation in the conflict or sustained rise in energy prices could affect investor sentiment and lead to fluctuations in India’s bond yields and broader financial markets.