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Informist, Wednesday, Jun. 10, 2026

--Dealers: OIS rises as US Trump says Iran to pay price for peace deal delay 

By Cassandra Carvalho

MUMBAI – Overnight indexed swap rates ended higher Wednesday, and the one-year swap reversed the fall to 5.99% seen in the previous session, as focus shifted again to Brent crude oil prices and US Treasury yields, dealers said. 

The one-year swap rate ended at 6.08% Wednesday, after closing at 5.99% Tuesday, its lowest since May 11. The five-year OIS rate ended at 6.48% against 6.43% Tuesday. The total notional trading volume reported on Clearing Corp. of India Ltd.'s derivatives trading platform was INR 330.15 billion, lower than INR 470.30 billion Tuesday.

Nearing the end of swap market hours, US President Donald Trump wrote on Truth Social that Iran will have to pay the price of not coming to a peace agreement yet. Following Trump's remarks, Brent crude oil futures for delivery in August rose to $93 per barrel at 1700 IST, up from an intraday low of $91, and up from $92.53 per barrel at the end of swap market hours Tuesday. Tracking the rise in crude oil, the five-year OIS jumped about 11 bps to 6.55%, before giving up some gains. 

"It was not an error trade, it was a panic trade because crude went up," a dealer at a private sector bank said. 

Swaps largely traded on the upside during the day after Trump late Tuesday said that the US must respond to Iran shooting down its helicopter. Volumes fell as traders were also cautious ahead of both India and US CPI inflation for May due this week, dealers said. 

OUTLOOK

The yield on the 10-year US Treasury note was 4.53% at 1900 IST, from 4.55% at 1700 IST. Traders are likely to track the movement of US Treasury yields after data showed that CPI inflation in the US hit a three-year high in May. However, core CPI inflation in May was lower than expectations at 0.2% on month, against a Wall Street Journal poll of 0.3%. Bets of the US Federal Open Market Committee raising interest rates in 2026 inched slightly lower after the data, compared to a day ago, as per the CME FedWatch tool. 

On Thursday, swap rates will continue to track crude oil prices and developments in the US-Iran peace negotiations. Swaps could tumble if a peace deal between the US and Iran is announced. On the monetary policy front, traders will still price in a quicker rate cycle in India, likely to begin as early as August due to elevated oil prices and as the monsoon is expected to be weak, stoking inflation, dealers said. A likely liquidity boost due to the RBI's measures to shore up capital could temper a rise in short-term rates, dealers said. 

Traders will also track any development in the inclusion of Indian government bonds on Bloomberg Index Services' flagship Global Aggregate Index after the RBI and the Centre Friday unveiled a slew of measures to improve foreign inflows, dealers said. Government sources said that such measures were intended to secure the inclusion. Bloomberg, which deferred its decision on the inclusion of Indian bonds in January, said it plans to provide the next update on the potential inclusion by mid-2026. Most traders expect the review this month.

Traders await India's CPI inflation data for May, scheduled Friday. Headline retail inflation is likely to have risen to a 16-month high of 4% in May, reaching the Reserve Bank of India's medium-term inflation target, according to the median in an Informist poll of 12 economists.

The movement of the rupee could also lend cues. Traders await the US Federal Open Market Committee's rate decision later this month, wherein status quo on interest rates is expected. The one-year swap rate is seen at 5.90-6.20% and the five-year at 6.30-6.64%.

End

US$1 = INR 95.2650

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Deepshikha Bhardwaj

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