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DBS flags improving appeal in 2-year Indian bond yields after sell-off

DBS expects RBI hawkish signals and long-end US Treasury volatility to keep India yields elevated, while fading FCNR(B) liquidity support could steepen the 2s5s government bond curve.

Reported · Written up by our desk · EM Currencies

DBS Group Research says hawkish Reserve Bank of India (RBI) minutes, along with volatility in the long end of the US Treasury market, have lifted Indian rates following a sell-off.

In a note highlighted by FXStreet, DBS strategist Sherilyn Chew said 2-year India Government Bond yields are becoming increasingly attractive, having returned to levels seen before the RBI’s 5 June policy package.

Chew also pointed to upcoming liquidity dynamics, saying fading FCNR(B)-related support could weigh on the 5-year segment, creating room for a steeper 2s5s India Government Bond curve.

The FXStreet coverage also noted broader currency and rates sentiment tied to upcoming central bank remarks, including focus on US Federal Reserve Chair Kevin Warsh’s Jackson Hole speech for cues on the interest-rate path that can influence the US dollar.

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