Bonds are broadly tracking the rupee. Dealers are a bit cautious in taking long positions because of the uncertainty of how the emerging markets react to the Fed move, said Harish Agarwal, dealer at First Rand Bank in Mumbai.
The benchmark 10-year bond yield closed at 8.82%, 5 basis points higher on the day. It rose to 8.85% in the session, its highest level since Jan. 3.
Interest rate swaps continued to rise in line with bond yields. The one-year rate rose to its highest in two-and-half months before ending at 8.69%, up 11 bps. The benchmark five-year swap rate closed 12 bps higher at 8.45%.