Indian bond rates are projected to rise in early trade on Monday, followed a surge in US yields, following a stronger-than-expected employment data, which reduced the chances of another major rate drop from the Federal Reserve. The benchmark 10-year bond yield is expected to range between 6.82 percent and 6.86 percent, compared to its last finish of 6.8339 percent, according to a trader at a private bank.

"We should see the selling trend persist at least in the initial part of the day, as the jobs data has surprised everyone, and even if there are no major developments in escalation of the conflict, sentiment should tilt towards bears," a trader stated. U.S. nonfarm payrolls climbed by 254,000 jobs in September, well above the 140,000 increases predicted by Reuters experts, while the unemployment rate fell to 4.1%, according to statistics released on Friday.

Following the report, the 10-year US yield jumped to its highest level in over two months, edging closer to the key 4% barrier. During Asia hours, the note yielded 3.97 percent. Expectations of a 50 basis point rate drop by the Fed in November are totally off the table, with the odds of a 25 basis point decrease increasing to 97% from last week.

Meanwhile, oil prices fell in early trade after posting their largest weekly increase in almost a year on Friday on growing fears of a regional war in the Middle East, with experts blaming it on profit-taking. As one of the world's top importers of oil, oil prices have a significant impact on retail inflation in India.

Back home, traders are awaiting the Reserve Bank of India's monetary policy announcement, which is likely to preserve the status quo, while predictions of a shift in stance have emerged. Traders will also watch for an announcement from FTSE Russell about the inclusion of Indian bonds in its emerging market debt index.