Bond yield curve shift change
754GS2036 Nothing technical about this trade but the very basics of profiting from fixed income security analysisWe know that the stock markets are at an all time high and valuations seem to be getting steeper day by day, we also know that we are going to be entering a rate cutting environment for the coming future initiated by the Federal reserve
So predicting that a similar suit will be followed by the RBI, Long term duration bonds would benefit from the convexity effect the most and interest rate cuts will shoot the bond prices further, also this investment contains very little to know risk because it is a government sector bond and at the current price an approximate YTM of 6.8 - 7% will be achieved
My forecast is that interest rate cuts will take place in India soon enough, on top of that, having a flight to safety security like the G-sec bonds will also be beneficial considering that we are at very high market levels. If you agree, do consider buying G-sec bonds not only for the annual 7% return but actually to capitalize on the forecast that there will be future interest rate cuts in India in the coming 1-1.5 yrs.
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