CURVE

In this issue, we cover:

• Market Moves: India’s 10-year G-sec yield rose 19 bps to 6.95% during the fortnight ended Aug 31, driven by higher crude prices, renewed inflation concerns, the closure of the FCNR(B) swap facility and expectations of rates remaining higher for longer.
• Global Rates: US 10Y yield rose amid sticky inflation, higher oil prices, and expectations of elevated rates. German and Japanese yields also hardened, while Chinese yields eased on policy-support expectations.
• Macro Indicators: CPI inflation rose to 4.45% in Jul’26, while the trade deficit widened to $31.98 bn. System liquidity remained in surplus at ~₹6.65 Tn, providing a cushion to domestic funding conditions
• FPI Highlight: FPIs turned net buyers in Indian equities, with ₹29,631 crore of inflows in Aug’26, supported by resilient earnings and India’s growth outlook. Debt flows, however, saw ₹1,457 crore of outflows, amid rising yields and inflation concerns.
• Segment Highlights:

i.                    Money Market: CP yields rose across maturities, while CD yields were mixed, with shorter-tenor rates easing and longer-tenor rates hardening. FCNR(B) swap closure added pressure to short-term funding costs.

ii.                  G-secs: G-sec yields hardened across the curve, amid higher crude, inflation concerns, heavy bond supply and rising global yields.

iii.                SDLs: SDL yields rose across tenors, led by the 10Y segment, tracking the G-sec sell-off amid tighter rate expectations and inflation risks.

iv.                 Corporate Bonds: AAA PSU bond yields rose sharply, as investors demanded higher spreads amid uncertainty around the inflation and interest-rate outlook.

• Product Snapshot: Covers category performance benchmarks and our full range of active and passive fixed income products.

CURVE reflects our continued commitment to provide relevant debt market updates. 

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