ETMarkets.com Synopsis Domestic bonds experienced mounting pressure after the Reserve Bank of India's recent policy minutes conveyed a hawkish tone.

The escalation in oil prices further compounded this decline in bond values.

Policymakers expressed a willingness to raise interest rates if inflation concerns arise, triggering fears of increased borrowing costs within the economy.

Meanwhile, global bond markets grapple with a challenging inflation and interest rate forecast.

By Reuters XPeers Axis Bank Share Price Kotak Mahindra Bank Share Price Federal Bank Share Price IndusInd Bank Share Price IDFC First Bank Share Price Aug 20, 2026, 05:59:00 PM IST Follow us A hawkish tone in the Reserve Bank of India's policy minutes jolted domestic bonds on Thursday, compounding pressure from rising oil prices and knocking the liquid 10-year benchmark to a two-month low.ADVERTISEMENT The yield on the benchmark 6.94% 2036 bond climbed 5 basis points to 6.8709%, its highest since June 15.

Bond yields move inversely to prices.RBI minutes released on Wednesday showed policymakers were more prepared to raise rates if inflation risks materialise, with concerns mounting over higher food, fuel and input costs feeding into broader price pressures.

Governor Sanjay Malhotra said that evidence of such spillovers could warrant "policy tightening." The comments accelerated the bond selloff by reviving expectations of higher borrowing costs.

The MPC minutes showed a path being built to eventual hikes, Tanay Dalal, economist at Axis Bank, said."We continue to see hikes to a 6% neutral, with room for an October move opening.

The U.S.

10-year yield also surged in Asian trade to 4.67%, adding pressure.Globally, bond markets are entering an era where the inflation and interest rate outlook is more uncertain and the upside risks are greater, with Washington's tariffs, mounting debt and the war on Iran upending the global order.ADVERTISEMENT Efforts to end the Middle East conflict also remained stalled on Thursday.RATESADVERTISEMENT India's overnight indexed swap rates surged sharply on rising rate hike bets.

The one-year swap rate jumped 12.75 bps to 5.9350%, while the two-year rate rose 11.5 bps to 6.1650%.

The liquid five-year rate ended 6.75 bps higher at 6.4750%.