Indian government bonds rose early on Thursday for a second straight session, tracking overnight gains in U.S. Treasuries after softer U.S. data eased concerns about an imminent Federal Reserve rate hike. The benchmark 6.94% 2036 bond yield fell 3 basis points to 6.7436% by 11:10 a.m. IST, extending ‌its two-day decline ⁠to ⁠5 basis points after hitting a three-week high on Tuesday. The yield also traded below its 21-day moving average, a technical level traders said could pave the way for further gains.Oil rally weighs on Indian bonds, value buyers limit fallIndian government bonds experienced a fourth consecutive session of decline on Wednesday. Benchmark bond yields rose to their highest level since late June. Rising oil prices and supply fears intensified concerns about India's economic outlook. The Indian rupee weakened to a two-month low against the dollar. Overseas investors continue to purchase bonds, supporting the market. The 10-year U.S. Treasury yield fell overnight to 4.55% after U.S. producer prices unexpectedly declined 0.3% last month, against expectations for no change, following a soft inflation reading. The data prompted investors to pare ⁠Fed rate-hike ‌bets, with futures pricing almost no chance of a July increase and a 51% probability in September, down from 25% ⁠and 75%, respectively. Lower U.S. yields eased pressure on emerging-market debt, helping Indian bonds recover. Brent crude fell below $85 a barrel despite fresh Gulf tensions and Strait of Hormuz supply disruptions, easing concerns over imported inflation. Several economists have also scaled back domestic rate-hike calls as inflation expectations eased. "By our estimates, July inflation is tracking lower at 4.0% year on year, from 4.4% in June..for FY27, we ‌forecast inflation at 4.6%, the current account deficit at 1.2% of GDP and an extended RBI hold," Nomura wrote in a note. Flows added support State-run lenders bought ⁠156 billion rupees ($1.62 billion) of bonds over the last three sessions. Foreign investors also stayed active, buying more than $4.2 billion of Fully Accessible Route bonds since June 1 on expectations India will be included in Bloomberg's Global Aggregate Index. RATES India's overnight index swaps eased in line with U.S. yields. The 1-year was down 3.5 bps at 5.8975%, while the 2-year rate fell 6 bps to 6.06%. The 5-year rate was down 5.25 bps at 6.3275%.