The month of January is when the budget starts entering the discussions and conversations of market
participants. Typically, there is some apprehension on taking a significant short or long position with
respect to duration ahead of the budget due to the possible volatility on budget day.
As such, we saw yields in the month of January largely range-bound with the yield moving up by only 1bp
m-o-m from 7.33% to 7.34%. The numbers in the budget with respect to fiscal deficit and borrowing are
slightly better than expectations and this has led to a softening of yields post-Budget.
In the events to watch out for, the actions of major global central banks such as US Fed, BoE and ECB will
have some bearing on global yields with some spillover impact on domestic yields as well.