So the RBI held rates at 5.25% in February and JM Financial is now flagging that yields could harden towards 7% because of the FY27 borrowing programme being Rs 17.2 lakh crore. That is 18% more than last year and higher than what the market was expecting.
I bought a 5yr bond in October when the rate cut narrative was strong. Genuinely second guessing whether that was the peak of the duration trade. Anyone else thinking about this?
The borrowing number was the surprise. When supply goes up and RBI is on pause, yields have a natural tendency to drift upward. Not great for people holding long duration on a mark to market basis. Though for buy and hold investors the coupon and principal are unaffected.