Bond Market Outlook: Why 7% Yields Are Catching Attention | Where Should Investors Put Money Now?
Why It Matters
The dislocation creates a potential arbitrage and high-yield carry window for investors, especially in high-quality corporate paper, at a time when equity flows have been volatile—making fixed income a strategic allocation for yield and risk management. Confidence in anchored inflation and fiscal stability reduces the odds of near-term rate hikes, strengthening the investment case.
Summary
Basant Bafna, head of fixed income at Mirae Asset Mutual Fund, says current fixed-income markets present an attractive carry opportunity as OIS and corporate bond curves have risen sharply while overnight rates remain low. Spreads—particularly in AAA non-SLR corporates—are well above historical means, making short- to medium-term (1–3 year) duration positions appealing as the money-market curve is expected to steepen over the next quarter. Recent liquidity surplus and bank credit-deposit dynamics have muted some mutual-fund inflows, but that may reverse as quarter-end effects ease and banks return to market borrowing. Over the medium term, anchored inflation and a stable fiscal glidepath support the view that rates are unlikely to rise materially in the next 12 months, reinforcing the case for fixed-income allocations.
Comments
Want to join the conversation?
Loading comments...