In this edition of Bond Compass, we highlight the key themes for May : • India G-sec yields continued lower in May, with moves lower pronounced in the near end of the curve. This was aided by ample liquidity in the system – aided by a sharp drawdown in GOI cash balances. • The RBI transferred a surplus of INR 2.69trillion for FY25 – this was mildly lower than market expectations, though impact on G-sec yields were limited. • The RBI MPC cut rates by 50 bps, (with 5 members voting in favor of the outcome) against market expectations of a 25-bps cut. In addition, the RBI also announced to cut CRR by 100 bps in four equal tranches starting Sep’25 through Dec. The central bank revised FY26 inflation lower to 3.7% from 4% earlier.
