IGB 10Y Monthly/Weekly UpdateIGB 10Y has risen by ~6 bps for the April month (8 bps for the last week), amid the continuation of geopolitical tensions and elevated crude oil prices. Market is pricing the higher inflation rates, which paves the way for rate hikes. This is also visible across OIS curve, with 6M OIS is trading around 5.62% which means market pricing in one rate hike, as on today, within 6 months.
High crude oil prices for long periods will be negative for Indian economy as we majorly import our crude products. The spillover effect can also be seen in the other industries related to fertilizers etc, which again moves up the inflation higher.
For May month, I expect IGB 10Y to trade in the range of 6.85%-7.25%. For the current week, I expect IGB to trade in the range of 6.97%-7.15%.
Let me know your thoughts. DYOR.
