The 'Oh so boring!' bond market has been experiencing quite a lot of action since the beginning of 2022. There has been a spike in yields, thanks to some of the announcements that the Federal Reserve, the central bank of the US, has come out with. Inflation has been a constant worry for months now in the US and the Federal Reserve has stated its intentions of hiking interest rates from the month of March. And the commotion continues in February as a reaction to the Budget. There are broadly two reasons. Firstly, the government announced its plan to borrow around Rs 15 lakh crore from the market in the next financial year. But why did the bond market not like this? Well, because the markets expected lower borrowing numbers. Now, a higher-than-expected borrowing means an excess supply of government bonds in the market. We all know when the supply of something is high, its prices tend to fall. And when you think about this phenomenon in the context of bonds, it also means the bond yields will rise. Secondly, there was no change in the taxation of Indian bonds. To give some perspective, there has been a lot of talk around inclusion of Indian bonds into global bond indices. And to give that a shot in the arm, the markets were expecting that the government would make the taxation of these bonds more favourable as a catalyst towards their inclusion in the global indices. However, that didn't happen and the markets gave a thumbs down. Consequently, the bond m
Buy, hold, or switch. Get the call.
How's my portfolio doing? What do I need to fix? Where should I invest next? Fund Advisor answers each one. The Advisor Note every Saturday. A live session with Dhirendra Kumar every second Saturday.
No commissions. No conflicts. Since 1991.
See Plans
Already a subscriber ?Log In
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
