Bond vigilantes stirred by US tax bill cloud foreign inflows to India

The spread between the benchmark 10-year Indian and US bonds has shrunk to a level last seen over two decades ago after the US Tax Bill

Narrowing interest rate spreads between the US and Indian bonds, driven by a slump in the world’s largest bond market, have clouded inflows into the domestic debt market. However, experts see only a minimal impact on Indian equities. 

 

“It’s a rather odd situation,” says Madan Sabnavis, chief economist at Bank of Baroda, describing the current state of the US economy—where bond yields are rising, the dollar is weakening, growth is slowing, inflation is poised to rise, and the Federal Reserve remains on hold.

 

All this as the US House Committee cleared President Donald Trump's 'big, beautiful' tax bill,