After 3 cuts last year, the FOMC paused and held policy rates steady in the 3.5-3.75% range, with limited urgency seen to bring rates lower. This outcome, along expected lines, is a result of a steadily growing economy, healthy consumer spending, and a stabilizing job market. Language on economic growth was upbeat, with expectations that the impact of tariffs on inflation will peak by mid-year and fall after that. This should broadly coincide with the end of term in May’26 for the current Fed Chair Powell. Longer tenor US Treasury yields edged marginally higher, with slowing possibility of further cuts. 

Indian bond market participants continue to wait for the Union Budget announcements, with all eyes on the fiscal deficit and market borrowing for FY27. 10-year G-Sec yields have risen by about 13 bps in the last one month, with limited respite from RBI’s liquidity announcements as supply fatigue continues.

Naval Kagalwala, COO & Head of Product, Shriram Wealth Ltd.