The ceasefire between the US and Iran boosts Indian bonds for a fifth consecutive day, but monsoon deficits limit room for further gains.

(1) The benchmark 10-year government bond yield in India closed down nearly 2 basis points at 6.7515% on Monday, marking its fifth consecutive trading day of declines and its lowest level since March 20. It fell by more than 22 basis points this month, benefiting from a drop of over 20% in oil prices.(2) The United States and Iran agreed to halt hostilities in the Gulf region and resume talks on the Hormuz Strait, boosting market expectations for a temporary peace agreement. Brent crude oil rose slightly to $72.52 per barrel, and overseas investment inflows are expected to reach a monthly record of $3 billion in June, providing additional support to the bond market.(3) However, monsoon risks continue to suppress gains in the bond market. As of June 28, the cumulative rainfall deficit across India widened to 43.1%, with all regions facing insufficient rain. Analysts point out that unstable monsoons pose upside risks to food inflation, and until the domestic and international outlook becomes clearer, bond yields may continue to fluctuate within a range.