With slow labor markets, mute inflation pressure and signs of the probability of up to three cuts before the end of the year, this is a clear main one from the Fed’s long break from December 2024.
Whenever the US As the yield moves physically, the yield of the Indian bond is tend to react, mostly through the emotion and the flow of capital.
US The smooth cycle in the Indian yields leads to a gentle move, though scale and speed vary depending on domestic conditions.
Right now, the global shift towards the simplest, if sustained, can encourage emerging market debt flow – a factor that can help anchor the local yield, especially in the absence of a large financial shock.
Locally, Indian bonds are facing global instability. The RBI has already simplified the next load policy since February, reducing the repo rate by 5.50%by 100 basis points accumulated.
This was supplemented by large liquidity support, more than 100 basis points CRRs will be phased out during September to November, with a fluid of around INR2.5 lakh crore in the banking system.
Inflation is running below 4% target, CPI with a print of only 1.55% in July, though RBI estimates gradually point to Ch CLIMB, which exceeds 4% at the beginning of 2027.
Rural usage forecast for the fiscal year 26 is stable, supported by recovery and capital costs, the government -led capital costs.
Many market participants have also observed, in recent months the local yield curve has been buzzing, especially between 10-year-old and 15-year maturity, because a limited 10-year supply and cautious spirit have pushed more.
Ultra-long bonds have been relatively more stable. The underlying global and domestic macro backdrop argues with the constructive period point of view, though this has happened.
For fixed income investors, the next 12-18 months appears to provide opportunities at both ends of the maturity spectrum. In the near term, credit spreads to high quality corporate bonds remains stable and attractive.
1-5 years AAA-rated corporate bonds with short-term gain strategies, CRR Cuts may deliver stable income from downward drift to short-term rates injecting liquidity.
This part of the portfolio plays protection while the yield king is done which can be more compressed.
The second leg of the situation is to maintain the main contact with long-term government bonds, especially in the 14-15 year segment and in the very long end.
Prolonging epilepsy seems to be an overdone compared to fundamentals, and the normalization spreads of the spirit or moderation in the supply can see the compress.
If the Fed pushes us down and reduces Indian yields, this part of the book will benefit from capital gains.
Together, this barbel approach-oriented oriented short-term plus a strategic long period-a view where local rates are close to the end of their smooth cycle but are supportive of global conditions bonds.
The RBI can hold until October and consider cutting a final 25 basis points in December, but without it, the expectations of abundant liquidity and inflation should be well supported.
The risks are pending-new inflation pressure, high long-bond supply or global shock-but the balance of prospects supports a steady bond market backdrop.
Therefore, investors can use the current EP Bhoop to the parts of the curve to select a selective period when carrying from short corporate exposure.
It is a patient’s strategy for a cycle that appears near its bottom in India, is still in its early stages globally.
(Author Managing Director and Head of Investment Strategy and Solutions, Waterfield Advisors.)
(Disclaimer: The views given by recommendations, suggestions, opinions and experts are their own. This does not represent the views of the economic time)
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