Fixed Income Pulse – June's Debt Market Snapshot & Debt MFs Insights
Financial Report
June saw increased volatility in the debt market post-policy, crude oil swings driven by geopolitical tensions, banking system liquidity at a three-year high, and the rupee remaining resilient amid a softening dollar backdrop.
Money Market and Low Duration Funds led the sub-1-year segment, posting strong 3-month annualised returns of 8.58% and 8.88% on elevated short-term rates and active positioning.
Short to Medium Duration funds and Credit Risk funds posted strong 3–12 month returns, reflecting favourable accrual and duration positioning.
Domestic bond yields rose sharply in June, with the 10-year benchmark climbing 9 bps, reversing the softening trend observed in May.
Liquidity conditions remained comfortably surplus in June, with rising systemic liquidity prompting calibrated RBI interventions to manage short-term rates and absorb excess funds.
The Indian rupee ended June marginally lower, underperforming Asian peers amid muted inflows and structural external imbalances, though it rebounded from late-month geopolitical-driven lows.
The attached snapshot covers all these developments, along with mutual fund performance trends across categories.
We believe the insights will help you stay informed and aligned with the evolving macro and market landscape.
Click below to read the full snapshot attached.