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Bond markets have seen notable volatility in recent months, despite a string of positive macroeconomic developments.

The RBI delivered a 50 bps policy rate cut in June 2025, followed by an announcement of 100 bps reduction in the Cash Reserve Ratio (CRR). Adding to the supportive backdrop, S&P upgraded India’s sovereign rating to BBB from BBB-, while headline inflation fell to an eight-year low of ~1.55%.

Contrarily, bond yields have risen by 30–50 bps across the curve, with long-duration G-Secs bearing the brunt i.e. a bear steepening in the G-sec yields curve. We attribute this move less to fundamentals and more to market sentiments, driven by evolving fiscal expectations and shifting regulatory dynamics. The resulting steepening of the G-Sec yield curve presents a compelling tactical entry point for investors.

The Month Gone By

Bear Steepening in G-sec Yield Curve

G-sec Spread over US Treasury Widens

High Supply of G-sec, SDLs in Auction

Term and Credit Spreads widened

Progress on Transmission

GST 2.0 Reforms

Current Account on the Fence

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