MUMBAI: Indian government bond yields declined on Thursday as oil prices and US Treasury yields continued their slide, pushing the 10-year rate to a five-week low.

The 10-year benchmark bond yield was at 7.2530% as of 10:00 a.m. IST, after ending the previous session at 7.2711%. Earlier in the day, it hit 7.2399%, the lowest since Oct. 6.

“The move has now completely turned in favour of the bulls, and hence we are seeing new lows getting tested everyday,” a trader with a state-run bank said.

US bond yields extended their decline, with the 10-year yield easing below the 4.50% mark in Asian trading on Thursday, after Wednesday’s 10-year note auction came in modestly better than expected.

US Treasuries have rallied on expectation that the Federal Reserve is likely done with its rate hike cycle.

The US 10-year yield had hit a more than 16-year high of 5.02% over two weeks ago but has since slipped, even as the two-year yield has not moved much, leading to a deeper inversion of the yield curve.

Meanwhile, oil prices also eased further on concerns over waning demand in the US and China and as US stockpiles were said to have risen.

India bond yields fall as oil slide boosts demand

The benchmark Brent crude contract slipped below $80 per barrel for the first time in over three months on Wednesday.

The contract has fallen nearly 7% in the last two days.

Easing oil prices are good for large importers like India, which imports nearly 85% of its crude oil needs. India’s retail inflation for October is due next week.

DBS expects a reading of around 4.50%, down from 5.02% in September.

Bond traders await fresh supply as New Delhi will sell 390 billion rupees ($4.68 billion) of bonds on Friday.