India's sovereign debt market faced significant selling pressure today as the benchmark 10-year government bond yield climbed to 6.73%, up from its previous close of 6.67%. This spike is primarily driven by escalating geopolitical tensions between the U.S. and Iran, which have pushed energy prices to their highest levels in over six months. Brent crude futures surged toward 71.50 USD per barrel, while the Indian Basket of crude jumped to an average of 68.13 USD for February. Market participants are increasingly concerned that a potential military confrontation could disrupt supply through the Strait of Hormuz, a critical artery for global oil flows. Higher oil prices pose a direct threat to India’s inflation outlook and fiscal deficit, as the country remains heavily dependent on energy imports. The bond market also remains on edge ahead of a planned 330 billion INR government debt auction. Investors are showing heightened caution, leading to a rise in long-term overnight index swap rates and a general pullback from risk-sensitive assets. In the currency market, the Indian Rupee weakened significantly, gapping down to 91.20 against the U.S. Dollar. This depreciation is fueled by the rising cost of dollar-denominated imports and sustained selling by foreign institutional investors. Domestic liquidity conditions continue to be a focus for the Reserve Bank of India. While the central bank recently paused its rate-cut cycle at 5.25%, analysts suggest that any further spike in crude-led inflation could delay future monetary easing and keep yields elevated for the foreseeable future.