In this episode of the State of the Economy Podcast, businessline’s Lokeshwarri speaks with Sandeep Yadav, Head-Fixed Income at DSP Mutual Fund, on the current state and future trajectory of interest rates, with a focus on both US and Indian bond yields.  

The conversation kicks off with Lokeshwarri probing Sandeep on the eagerly anticipated US Fed rate cuts, particularly amidst the backdrop of the upcoming US elections. Sandeep offers insights into the market dynamics, emphasising the importance of aligning with the Fed’s cautious approach, given their access to robust data and expert analysis.  

 With regards to India, the discussion looks at RBI’s policy stance and the potential impact of domestic factors such as inflation and consumption trends. Sandeep underscores the delicate balance between inflation dynamics and financial market stability, highlighting the need for RBI to closely monitor global central bank actions.  

 “So, it’s just the opposite in India. In India, it is transitory. And the volatile inflation part, which is keeping the headline inflation high, whereas something which is much more stable and much more trending, which is core inflation, and which reflects the underlying demand of the economy, well, that’s been coming down.”, says Sandeep Yadav  

Yadav provides a comprehensive analysis of the Indian bond market, citing factors such as demand-supply dynamics and fiscal deficit management. He predicts a downward trajectory for Indian bond yields, driven by anticipated RBI rate cuts and sustained demand from institutional investors.  

Yadav talks about the yield curve dynamics, outlining the differential impact of RBI rate cuts on short-term and long-term bond yields. He advises investors to consider active fund management strategies to navigate the complexities of the bond market effectively.  

 Yadav also shares the importance of aligning investment strategies with evolving market dynamics, urging investors to remain vigilant amidst shifting interest rates.  

 Listen in! 

(Host: Lokeshwarri SK; Producer: Siddharth MC)

About the State of the Economy Podcast

India’s economy has been hailed as a bright spot amid the general gloom that seems to have enveloped the rest of the world. But several sectors continue to stutter even as others seem set to fire on all cylinders. To help you make sense of the bundle of contradictions that the country is, businessline brings you podcasts with experts ranging from finance and marketing to technology and start-ups.