MUMBAI: Indian government bonds are likely to track the selloff in US Treasuries in early Wednesday trade, as elevated oil prices continue to feed inflation worries.

The benchmark 6.48% 2035 bond yield may move in a 7.10%-7.15% range, a private bank trader said. It had ended at 7.1101% on Tuesday.

Bond prices move inversely to yields.

“The rise in Treasury yields has complicated the matter for the fixed income market, as the interest rate differential is contracting and would make it tough for India to attract capital flows,” the trader said.

The 30-year US yield jumped to a 19-year high on Tuesday, following a selloff in global long bonds.

The 10-year US yield hit 4.69% on Tuesday, its highest level in 16 months.

US Vice President JD Vance said the US and Iran had made progress in talks, with neither side wanting to see a resumption of military action.

Earlier, President Donald Trump said he was holding off on a military attack that had been scheduled for Tuesday.

Efforts to reach a deal with Iran continued, though he added the US was ready to resume attacks if a deal was not reached.

The benchmark Brent crude stayed around $111 per barrel, far higher than Indian policymakers’ assumption of $85 for the fiscal year.

Elevated prices could fuel inflation, pressure the rupee, widen the current account deficit and complicate the government’s fiscal calculations for India, which imports nearly 90% of its crude requirements.

Interest rate futures are now showing a 47% probability that the Federal Reserve will hike interest rates in December, while bets on any further rate cuts have been ruled out.

Meanwhile, the Indian rupee is poised for another record low against the dollar as a surge in Treasury yields has compounded pressure on the already strained currency.