In this edition of Bond Compass, we highlight the key themes for Aug/early Sep : • India G-Sec yields closed 19 bps higher at 6.57% in August, driven by various factors: status quo by the RBI MPC, the announcement of 50% tariff imposed by the US, GST cut and fears of fiscal slippage. • The GST rationalization to 2 slabs from 4, gave rise to fiscal concerns pushing the 10y IGB yields higher. • Weakness in INR on fears of US trade tariffs and sustained foreign portfolio outflows; the rupee touched an all-time low of 88.47/$. • Tailish SDL auctions and widening of SDL spreads pushed SDL yields higher, exerting upward pressure on G-Sec yields. • The stronger-than-expected growth figure for Q1FY26 at 7.8%, was largely attributed to front-loaded capex spending by both the Centre and States
