Indian government bonds wobbled on Wednesday, while still faring better than most global peers as surplus liquidity from banks' diaspora deposits softened the blow from higher oil prices.Brent crude surged to $102 a barrel in Asian trade after the United States and Iran struck more tankers near the Strait of Hormuz, escalating supply concerns that ‌contributed to ⁠an extended global ⁠debt selloff.The U.S. 10-year Treasury yield climbed 3 bps to 4.8650% on Thursday, its highest since ​November 2023. Germany's 10-year yield reached its highest in more than 15 years, while Japan's equivalent bond ​yield pushed back toward a peak last seen in September 1996. Bond yields rise when prices fall.India bonds face twin drag from rising oil, US yieldsIndian government bonds weakened for a second day on Thursday. Rising U.S. Treasury yields and crude prices above $100/barrel fueled inflation concerns. Higher oil prices threaten India's import bill and government finances. The rupee also slipped for a fifth day against the dollar. Focus remains on upcoming inflation prints and the Fed's policy decision.Indian bonds also fell, but remained comparatively insulated. The benchmark 6.94% ​2036 bond yield rose nearly 2 basis points to ⁠6.9762% on ‌Thursday, its highest in over three months.A banking-system liquidity surplus ​of 10.5 ​trillion rupees curbed the scope for heavy selling, traders said.Indian debt ⁠has outperformed most global peers since the U.S.-Iran war began ​in February, LSEG data shows, aided by the Reserve Bank ​of India's dollar-attracting measures.Yet risks remain skewed toward higher yields as the liquidity glut in India's banking system may be concealing an otherwise bearish market bracing for tighter monetary policy, traders said.Investors await U.S. inflation data on Friday and have an eye on Indian inflation as well as the Federal Reserve's policy decision next ‌week.A Reuters poll showed most economists expect the Fed to hold rates at its Sept. 15-16 meeting and through year-end.Attention is also ​turning to ​the RBI's liquidity-draining tools.Traders said ⁠the central bank likely conducted near-maturity dollar-rupee sell-buy swaps for a second day on Thursday and may rely further on such swaps after variable-rate reverse repos failed to keep ​call rates within the policy corridor. Some are betting that a cash reserve ratio hike may also be on the cards.RATESOvernight indexed swap rates rose, though paying interest stayed contained.The one-year rate added 1.5 bps at 6%, the two-year rose 2.5 bps to 6.2050%, and the five-year jumped 4 bps to 6.52%.