• On Thursday, the 10Y benchmark (6.94% GS 2036) opened 4 bps higher at 7.08%, tracking hardening in 10Y UST to 5.11% levels overnight and rise in Brent crude price to $102/bbl. • UST yields hardened amid a rebound in oil prices, stronger than expected US PMI data, and weak demand at the 5-year US Treasury auction, which pushed the 5-year yield above the 5% levels. • Intraday, Brent crude rose to $106/bbl as talks between the US and Iran showed no concrete signs of progress. Reports also emerged that an Iranian official warned that Iran could extend the conflict to the Indian Ocean if the US launches another attack. • Over the day, 10Y IGB yields hardened to 7.115% amid geopolitical uncertainty. The 10Y point closed the day 7 bps higher at 7.11% vs 7.04%. • Banking system liquidity remained at surplus of around INR 4.34 Tn. RBI conducted overnight VRRR auction for INR 1.25 Tn to absorb excess liquidity, accepting INR 1.01 Tn at 5.24%.
