10yr benchmark yields traded in a narrow range of 7.06%-7.11% and eventually ended the month 6 bps lower sequentially at 7.08%. The 10y benchmark averaged 7.08% in February 2024.

Fiscal consolidation and optimism ahead of FPI index flows have been supportive of yields. While RBI has consistently emphasized that the inflation target is 4% on a durable basis and that any premature easing remains unlikely, average inflation at 4.5% for FY2025 is supportive for sentiments even as risks remain from food prices and from global macro developments.

Going ahead, the outlook for 10-year G-Sec will largely depend on the extent of FPI flows, global macro developments and the evolution of the domestic inflation trajectory.