10yr benchmark yields traded in the range of 7.28%-7.43% and eventually ended the month 9bps higher sequentially at 7.43%. The 10y benchmark averaged 7.35% in February.

The Budget was neutral for markets as the gross borrowing figure of Rs 15.4lakh crore was in line with market expectations.

Markets were anticipating that the RBI would tone down the hawkish tone in the Feb policy but the RBI poured cold water on any such hopes sticking to the vigilant tone on inflation. As a consequence, the market has started repricing the possibility of further hikes in coming policies.

The CPI Inflation reading for the month of January also surprised markets which came in far higher than expectations. The reading has further quelled expectations of RBI ending rate hikes.