India bonds fall after US scraps Iran talks, raising escalation jitters

Indian government bonds slipped in early deals on Monday after hopes of a US-Iran diplomatic breakthrough faded due to Washington's cancellation of planned talks. This raised geopolitical uncertainty. The benchmark 6.48% 2035 bond yield was at 6.9534% as of 10:00 a.m. IST, after ending at 6.9365% on Friday. Bond yields move inversely to prices. A trader noted that the spike in oil prices reflects supply anxiety rather than fundamentals, and that as long as tensions remain high, import-sensitive markets like India will stay vulnerable. The article highlights concerns over rising oil prices due to supply anxieties, impacting India’s import-sensitive economy, which imports nearly 90% of its crude needs. Higher energy costs could increase the import bill, inflation, and fiscal deficit. Investors are also tracking global monetary policy decisions this week, including interest rate decisions from the Bank of Japan, Bank of England, European Central Bank, and the U.S. Federal Reserve. Oil prices rose in Asian trade on Monday after U.S. President Donald Trump suggested Iran could negotiate if it wanted, while reiterating that Tehran would never possess nuclear weapons. Optimism around renewed peace efforts weakened after Trump scrapped a planned visit by his envoys to Islamabad. Iranian Foreign Minister Abbas Araqchi traveled between Pakistan and Oman on Sunday as diplomatic efforts continued via intermediaries. Iran has effectively closed the Strait of Hormuz, a critical chokepoint for nearly a fifth of global oil supply, while Washington tightened pressure by blocking Iranian ports. The sharp rise in oil prices is a particular concern for India, which imports nearly 90% of its crude needs.