Debt Market Outlook For March: IDFC Research
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Global bond markets continued to sell off amidst improved economic outlook, rise in commodity prices, and resultant higher inflation expectations.
Globally, the increase in bond yields was led by the long end of the curve possibly suggesting markets being more fearful of the increased bond supply and inflation surge rather than premature tightening.
The sell-off for Indian bonds started from the budget day with announced fiscal deficit and consequent government borrowing much higher than consensus expectations (fiscal deficit for FY 21 at 9.5% and for FY 22 at 6.8%; market estimates 7% and 5.5% respectively) and continued with the rise in global bond yields amidst an intermittent central bank support.
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