MUMBAI: Indian government bonds retreated on Tuesday, after Bloomberg Index Services held off including them in its global bond index, saying they will keep the review open and ongoing. The benchmark 10-year yield was at 6.6334% as of 10:35 a.m. IST. It ended at 6.6050% on Monday. Bond yields move inversely to prices. The 10-year yield fell about 3 basis points at the open, then swung about 6 bps higher after the Bloomberg index news. Traders had been banking on India’s fully accessible route (FAR) bonds joining the Bloomberg Aggregate Bond Index until Bloomberg Index Services deferred inclusion and said it would update the review by mid-2026. Goldman Sachs had estimated the inclusion could bring $10 to $20 billion of inflows into the Indian debt market. “Investors had begun positioning for the index inclusion… this is a major setback for the market,” a private-bank trader said. Separately, Indian states are set to auction 268.15 billion rupees ($2.97 billion) later on Tuesday, about 26% less than the amount set out in the borrowing calendar. The central bank is also due to initiate a $10 billion dollar-rupee foreign-exchange swap. Traders speculated the RBI was on the buying side on Monday through secondary market purchases. Geopolitical risks and higher oil prices further undermine the outlook for Indian bonds, traders said, with the market keeping a watch on a deepening feud between President Donald Trump and the US Federal Reserve as well as developments in Iran.