Bond Yields Rise Amid Crude Price Surge Following Trump's Address

Global Markets Reel as US President Trump Signals Escalation in Iran War

Benchmark bond yields edged higher on April 2 as global crude prices surged after US President Donald Trump signalled escalation in the Iran war. The benchmark 10-year bond yield was trading at 7.05 percent against the previous close of 7.03 percent. Currency and fixed income markets were closed on March 31 and April 1.

The yield crossed the psychological 7 percent mark on March 30 after oil prices remained elevated, leading to a broad sell-off. Crude surged more than 4 percent after Trump, in his address to the nation, signalled escalation in the Iran war without offering a timeline to end the conflict, which is in its second month. The conflict began on February 28, when the US and Israel launched strikes on Iran.

Brent crude zoomed to $106 a barrel after Trump's first address, the first after the US and Israel launched strikes on Iran on February 28. Elevated Brent crude prices stoke inflationary pressures, weighing on domestic bond yields.

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In contrast to the bond market, the rupee, however, opened 130 paise higher a day after the Reserve Bank of India (RBI) introduced additional measures to curb the volatility in the currency, even as banks continued to unwind their offshore long dollar positions.

The RBI's measures included barring banks from offering rupee non-deliverable forwards to resident and non-resident clients, and stating that companies cannot re-book cancelled foreign exchange derivatives contracts. The rupee was trading at 93.53 to the dollar after ending the previous session at a new low of 94.83 on March 30.