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Key Points

Crisil Intelligence has released a report predicting a modest decline in bond yields over the next few months. The forecast is driven by easing inflation, falling oil prices, and potential monetary policy adjustments by the Reserve Bank of India. The report suggests the 10-year government security yields could range between 6.46-6.56% by October 31. The analysis also highlights potential factors influencing bond markets, including global economic uncertainties and government borrowing patterns.

Key Points: Crisil Predicts Bond Yields Drop Amid RBI Rate Cut Signals

  • Crisil forecasts 10-year G-sec yield between 6.46-6.56% by October
  • RBI Monetary Policy Committee signals potential rate cuts
  • Inflation expected to soften to 3.2% in fiscal 2026
  • Trading volumes for G-secs increased 9% month-on-month
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Bond yields likely to modestly decline due to easing inflation, rate cut: Report

Crisil Intelligence forecasts modest decline in bond yields driven by easing inflation, benign oil prices, and potential RBI monetary policy shift

"Bond yields expected to edge lower in the coming months - Crisil Intelligence Report"

New Delhi, Oct 14 (IANS The benchmark 10‑year government bond yields is expected to edge lower in the coming months, driven by benign inflation, falling oil prices, and possible monetary easing by the Reserve Bank of India, a report said on Tuesday.

A report from Crisil Intelligence forecasts the 10-year G-sec yield to be between 6.46 per cent and 6.56 per cent by October 31 and between 6.39 per cent and 6.49 per cent by December 31.

Similarly, SDL yields are also expected to decline by 8 to 10 bps over similar tenures. Corporate bond yields also may see a dip of 6 to 10 bps over this tenure, the report said.

Further, Crisil forecasted that the RBI's Monetary Policy Committee is expected to cut the policy rate further this fiscal year, driven by GDP growth and inflation trends

Analysts indicated that the one-month outlook on bond yield is based on easing inflation and benign oil prices which offset the impact of geopolitical uncertainties and slowing global growth.

Other factors that could affect the yield include market liquidity, renegotiation of US tariffs, foreign portfolio investor (FPI) inflows, rupee depreciation, the US Federal Open Market Committee's decisions, global uncertainties, and anticipated state and central government borrowings.

The MPC on October 1 maintained the repo rate at 5.50 per cent and a neutral stance, signalling potential room for future rate cuts. Following this, the 10-year benchmark 6.33 per cent GS 2035 closed at 6.52 per cent.

Trading volume for G-secs increased 9 per cent on-month in September, while that for T-bills increased 11 per cent. Trading volume for SDLs decreased 23 per cent, while that for corporate bonds

increased 13.31 per cent. GST rationalisation and stronger direct tax collections are anticipated to boost state revenues, helping to ease supply-demand pressures in the market, the report noted.

Crisil Intelligence forecasted CPI inflation to soften to 3.2 per cent in fiscal 2026 from 4.6 per cent last year

- IANS

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Reader Comments

R
Rohit P
As someone who invests in corporate bonds, this is encouraging. But I hope the government maintains fiscal discipline and doesn't overshoot borrowing targets. Lower yields are good, but not at the cost of fiscal health.
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Arjun K
Good analysis, but I'm skeptical about the inflation projections. Food prices are still high in local markets, and monsoon uncertainties could push inflation up again. RBI should be cautious with rate cuts.
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Sarah B
This is positive for home loan borrowers! Lower bond yields typically lead to lower interest rates on loans. Looking forward to potential EMI reductions in the coming months. 🏠
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Vikram M
The correlation between falling oil prices and bond yields is interesting. As an NRI investor, I'm watching FPI inflows closely. If global uncertainties ease, we could see significant foreign investment in Indian bonds.
M
Michael C
While the outlook seems positive, I hope the government uses this opportunity to focus on infrastructure spending. Lower borrowing costs should accelerate public projects that create jobs and boost growth.

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