By IndiaHub 
In a post on social media platform X (formerly Twitter), Kotak noted how India’s 10-year bond yield stands at 6.20% pa and the US is at 4.60%, representing a gap of 1.60%, highlighting a significant compression in the spread between benchmark yields of the two countries
“India 10-year bond yield at 6.20% pa. US 4.60%. Gap of 1.60% is probably the lowest I recollect,” he said in his post.
JPMorgan Chase CEO Jamie Dimon advocates for taxing carried interest, aligning with Donald Trump’s efforts to close the loophole benefiting private market investors. Dimon suggests using the additional revenue to double income tax credits, benefiting communities and families. He also cautioned about a potential “crack in the bond market” due to government overspending and quantitative easing.
Link: https://x.com/udaykotak/status/1925415010450428317
Historically, this spread has been much wider, reflecting the relative risk perceptions, inflation trends, and macroeconomic conditions.
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Kotak posed a thought-provoking question in his post: “Will we 1 day see Indian yields lower than the US?”While that scenario has traditionally seemed unlikely due to India’s historically higher inflation and risk premium, the current trend raises interesting possibilities.He further explained that such a reversal in yield differentials would depend on a combination of economic factors: “Depends mainly on relative inflation, risk premium, trust, and liquidity, for global and domestic investors in these 2 countries!”
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The narrowing of the yield gap comes at a time when India has been witnessing relatively stable inflation and robust foreign portfolio investment flows, while U.S. yields have been volatile due to shifts in Federal Reserve policy expectations.
As of May 22, the India 10-year government bond yield stands at 6.25%. In comparison, the U.S. 10-year Treasury yield has risen to 4.60%, following a weak $16 billion auction of 20-year bonds that drew less investor demand.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)