Indian government bonds were muted on Monday, as softer Brent tempered anxiety over a US Treasury selloff and the Reserve Bank of India's liquidity-draining bond sales.

The benchmark 6.94% 2036 bond yield was at 7.0614% by 11:00 a.m. IST, barely moving from Friday's close, after rising 31 basis points over five weeks - its longest weekly rising streak in about a year.

Oil slid to a more-than one-week low in Asian trade, on rising prospects for diplomacy over the Iran war and recovering in Saudi shipments.

"Markets will remain rangebound, though oil prices are down even as the war has escalated," said Alok Singh head of treasury at CSB Bank in Mumbai, adding that investors are hoping for an end to the conflict for further direction.

Lower oil prices helped counter domestic supply pressure stemming from the RBI's planned 250-billion-rupee ($2.61 billion) open market bond sale.

The auction is the second of three sales totalling 1 trillion rupees, the RBI's first such operation since November 2017.

The banking system's liquidity surplus has narrowed to 6.19 trillion rupees from a record 11 trillion rupees hit earlier this month.

The RBI is also confronting a tougher global rate backdrop. Major central banks, including the Federal Reserve, European Central Bank and the Bank of Japan, signalled further tightening to contain inflation.

That shift pushed global yields higher, with the 10-year US Treasury yield at 5%, a level last seen during the 2008 financial crisis.

Traders now increasingly expect the RBI to raise the repo rate in October to keep real rates positive.

Overnight indexed swap rates inched lower on oil respite.

The one-year rate was flat at 6.07%, the two-year rate fell 0.5 bps to 6.2750%, and the five-year rate eased 2 bps to 6.56%.