Investment Insights

Arvind Subramanian

Liquidity in Credit Markets

By: Arvind Subramanian

As we have highlighted in our recent notes, price discovery in credit markets involve two key aspects. The first aspect is the movement of bond yields in sync with the broader market. This, we believe, is captured reasonably well since all securities are continually valued relative to a liquid benchmark and are accordingly marked up/down, […]

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Suyash Choudhary

Introduction   Prima facie there has been ample to be confused about, with respect to the current bond market. There is sufficient noise both with respect to quantum of expected RBI easing as well as with the data on hand. The two are interlinked in the sense that if data were to clarify itself, specifically […]

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Suyash Choudhary

Anatomy Of An Owl : A Bond Update

By: Suyash Choudhary

RBI Governor Urjit Patel, when he was deputy Governor under Raghuram Rajan, had once famously said that RBI is neither a hawk nor a dove, but an owl. As explanation he had offered that an owl is traditionally a symbol of wisdom and that owls are vigilant when others are resting.  He couldn’t have put […]

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Suyash Choudhary

RBI June 2017 Policy: Takeaways

By: Suyash Choudhary

Bond market had gone into the current policy expecting RBI to acknowledge its ‘mistake’ with respect to over-estimating its near term CPI trajectory. In that it wasn’t disappointed. Thus RBI’s HI forecast for CPI has been dramatically revised down from 4.5% to 2 – 3.5%. Whereas, H2 forecast has been revised to 3.5 – 4.5% […]

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Arvind Subramanian & Khushboo Sharma

Assessing Credit Funds

By: Arvind Subramanian & Khushboo Sharma

With the rapid growth in credit funds and a plethora of options available to an investor within the category, it is important to understand the parameters on which these funds should be differentiated. Unfortunately, Yield to Maturity (YTM) has become the principal metric by which credit funds are measured. It is commonly believed that higher […]

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Suyash Choudhary

A Time To Be Still : A Bond Update

By: Suyash Choudhary

Expectations in the bond market with respect to incremental RBI rate action have been very volatile over the past few months. The RBI provided a rude shock in December by almost an about turn in its stance from October. Presumably this was done in anticipation of prospects of heightened financial volatility on the back of […]

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Suyash Choudhary

Introduction   The credit funds’ industry has grown rapidly over the past two years, even as the average credit rating of instruments held in most of these funds has steadily deteriorated. From a manufacturer’s perspective, this may be explained by a constant pressure ‘to dig deeper’ as spreads shrink and still a certain portfolio yield […]

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Suyash Choudhary

Introduction   An integral part of our core portfolio view for most of the last one year has been yield curve steepening. In our view, it is logical to expect that towards end of a rate cycle, as net demand for duration wanes and participants start focusing more on ‘carry’. Indeed, despite intermediate disruptions, the […]

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Suyash Choudhary

The policy today was being looked at for one thing primarily: the RBI’s view and plan with respect to the massively excess liquidity sloshing around in the system since demonetization. The rate stance of neutrality has been well digested and market expected little incremental direction in this regard. Therefore, it is appropriate to start with RBI’s […]

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Suyash Choudhary

Just ‘Coz You See It (Doesn’t Mean It’s There): A Bond Update   We’ve been aligned to the idea of a steepening yield curve for some time now. Our chief reasons behind the expectation have been 2 fold: limited incremental visibility of rate cuts, and higher aggregate duration bond supply (including GOI, states, UDAY). This […]

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