Latest news with #BrettonWoods
India Gazette
3 hours ago
- Business
- India Gazette
Indian bond market showing strength with easing inflation and expansionary policy by RBI: Jefferies
New Delhi [India], May 31 (ANI): The Indian bond market is showing signs of strength, driven by easing inflation and expectations of more interest rate cuts from the Reserve Bank of India (RBI), says a report by Jefferies. The report highlighted that this environment is creating an attractive setup for domestic bonds, particularly for long-term investors in a shifting global landscape. Consumer price inflation in India has been declining steadily. Over the last fiscal year, it averaged 4.6 per cent, and in April 2025, it fell to just 3.2 per cent, the lowest level since July 2019. This drop in inflation is giving the RBI more room to lower interest, since then, the RBI has already cut policy rates by 50 basis points. Jefferies expects an additional 75 basis points of cuts by the end of 2025. This rate-cutting cycle is enhancing the appeal of Indian government bonds, especially when compared to developed markets like the US. In fact, India's 10-year rupee-denominated government bond has outperformed the US 10-year Treasury bond by 51 per cent in US dollar terms since April 2020. Jefferies said 'While the India 10-year rupee government bond has outperformed the US 10-year Treasury bond by 51 per cent since April 2020 in US dollar terms. Indeed, it is no longer unthinkable that the ten-year Indian government bond yield will trade below the ten-year Treasury bond yield' Moreover, the strength of the Indian rupee and the performance of local-currency emerging market bonds globally are reinforcing the positive sentiment. A key global sovereign bond portfolio tracked by Jefferies has India's 15-year bond carrying a yield of 6.38 per cent, forming the largest single-country allocation at 25 per cent of the portfolio. This reflects continued confidence in the Indian bond market amid structural shifts away from G7 debt instruments. Jefferies said 'these bonds continue to outperform G7 government bonds, which is another sign of regime change from the Bretton Woods era, as is the growing evidence of supply concerns moving the long end of the US Treasury bond market'. Overall, with disinflationary pressures growing and real rates remaining attractive, India's bond market is well positioned to benefit from both domestic rate easing and international investor interest in emerging market debt. As global investors look for alternatives to volatile G7 bonds, India remains a standout destination offering relatively high yields, a stable macroeconomic outlook, and the potential for currency appreciation. (ANI)
Mint
5 hours ago
- Business
- Mint
Indian bond market showing strength with easing inflation and expansionary policy by RBI: Jefferies
New Delhi [India], : The Indian bond market is showing signs of strength, driven by easing inflation and expectations of more interest rate cuts from the Reserve Bank of India , says a report by Jefferies. The report highlighted that this environment is creating an attractive setup for domestic bonds, particularly for long-term investors in a shifting global landscape. Consumer price inflation in India has been declining steadily. Over the last fiscal year, it averaged 4.6 per cent, and in April 2025, it fell to just 3.2 per cent, the lowest level since July 2019. This drop in inflation is giving the RBI more room to lower interest, since then, the RBI has already cut policy rates by 50 basis points. Jefferies expects an additional 75 basis points of cuts by the end of 2025. This rate-cutting cycle is enhancing the appeal of Indian government bonds, especially when compared to developed markets like the US. In fact, India's 10-year rupee-denominated government bond has outperformed the US 10-year Treasury bond by 51 per cent in US dollar terms since April 2020. Jefferies said "While the India 10-year rupee government bond has outperformed the US 10-year Treasury bond by 51 per cent since April 2020 in US dollar terms. Indeed, it is no longer unthinkable that the ten-year Indian government bond yield will trade below the ten-year Treasury bond yield" Moreover, the strength of the Indian rupee and the performance of local-currency emerging market bonds globally are reinforcing the positive sentiment. A key global sovereign bond portfolio tracked by Jefferies has India's 15-year bond carrying a yield of 6.38 per cent, forming the largest single-country allocation at 25 per cent of the portfolio. This reflects continued confidence in the Indian bond market amid structural shifts away from G7 debt instruments. Jefferies said "these bonds continue to outperform G7 government bonds, which is another sign of regime change from the Bretton Woods era, as is the growing evidence of supply concerns moving the long end of the US Treasury bond market". Overall, with disinflationary pressures growing and real rates remaining attractive, India's bond market is well positioned to benefit from both domestic rate easing and international investor interest in emerging market debt. As global investors look for alternatives to volatile G7 bonds, India remains a standout destination offering relatively high yields, a stable macroeconomic outlook, and the potential for currency appreciation. This article was generated from an automated news agency feed without modifications to text.
Time of India
6 hours ago
- Business
- Time of India
Indian bond market strengthens as inflation eases and anticipated RBI rate cuts: Jefferies
NEW DELHI: The Indian bond market is gaining momentum due to lower inflation and expectations that the Reserve Bank of India will cut interest rates, according to a report by Jefferies. The report indicates favourable conditions for domestic bonds, particularly appealing to long-term investors amid evolving global financial conditions. India's consumer price inflation has shown a consistent downward trend. The previous fiscal year recorded an average of 4.6%, while April 2025 witnessed a reduction to 3.2%, reaching its lowest point since July 2019. The declining inflation trend has provided the RBI additional flexibility for interest rate adjustments, resulting in a 50 basis points reduction in policy rates. Jefferies anticipates further cuts of 75 basis points through 2025. The ongoing rate reduction phase is increasing the attractiveness of Indian government bonds, particularly when assessed against developed economies such as the United States. According to Jefferies, "While India 10-year rupee government bond has outperformed the US 10-year Treasury bond by 51% since April 2020 in US dollar terms. Indeed, it is no longer unthinkable that the ten-year Indian government bond yield will trade below the ten-year Treasury bond yield." by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Giao dịch vàng CFDs với sàn môi giới tin cậy IC Markets Tìm hiểu thêm Undo The Indian rupee and positive performance of local-currency emerging market bonds globally are contributing to the optimistic outlook. A significant global sovereign bond portfolio monitored by Jefferies shows India's 15-year bond yielding 6.38%, representing the highest single-country allocation at 25%. This demonstrates sustained trust in the Indian bond market during structural transitions away from G7 debt instruments. Jefferies further said that "these bonds continue to outperform G7 government bonds, which is another sign of regime change from the Bretton Woods era, as is the growing evidence of supply concerns moving the long end of the US Treasury bond market". The Indian bond market appears favourably positioned to gain from domestic rate reductions and international investment interest in emerging market debt, supported by decreasing inflation and attractive real rates. India continues to attract global investors seeking alternatives to G7 bonds, offering substantial yields, stable economic conditions, and potential currency value increase. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Fast Company
2 days ago
- Business
- Fast Company
The global system is changing—here's what business leaders need to know
Recent volatility in the markets is raising concerns around the globe about the emergence of a possible new world order with unclear consequences. The current rules-based system has been the dominant force that has shaped geopolitics and economics since the end of World War II. This system, developed largely by the U.S. and its allies, has been based on a set of rules for trade and commerce conceived at the Bretton Woods conference in 1944. They created a fixed currency exchange system and international organizations such as the World Bank and the International Monetary Fund. These entities were designed to promote economic cooperation and stability. In this system, the dollar has been the dominant reserve currency, English the de facto international language, and the US a stalwart of economic stability. Under this system, the world has experienced strong economic growth and increased prosperity. The world GDP by 1960 was less than $1.5 trillion, but today it's over $106 trillion! Any wholesale changes to this system that may result from the current economic upheaval will have major implications for today's business leaders, as it could mean slower economic growth, more inflation, and lower consumer purchasing power. Countries that thrived in this system shared common elements such as democratic governments with the rule of law, primarily free market economies that openly trade with other countries, stable and transparent policy environment, high rates of education, social safety net systems, robust infrastructures, and more. If there is a disruption of any of these pillars, such as open trade, today's executives can face an entirely new business environment. As the recent slide in the dollar shows, unpredictable economic policy can result in currency devaluation, higher prices of inputs, and squeezed profit margins. In this situation, business leaders can either raise prices and lose some of their customers or be less profitable. Neither scenario sounds appealing. THE DECLINE OF MIDDLE-CLASS STABILITY Given the progress over the last 80 years, how, then, can we explain the current wave of discontent and upheaval in many of the advanced nations that is threatening this system? Much has to do with the economic developments of the past few decades. While advancements in technologies such as personal computers and the internet created whole new industries that led to economic growth and wealth creation, it also resulted in major displacements such as globalization, leading to offshoring and the disappearance of a large number of jobs. This, along with high rates of immigration, which led to lower wages, made a middle-class life less possible for millions in advanced economies. These major economic shifts have happened previously (e.g., the transition from farming to manufacturing), but this time, there has not been as much support from governments and the private sector for the transition of the displaced workers into new jobs. The reasons for this lower level of support are numerous, but there has been a troubling trend of fewer public sector investments in advanced economies over the last few decades. These investments were critical to the formation of a middle class in the first place. Take the U.S. as an example: The federal government used to invest over 2% of its annual GDP in basic R&D. That number is now closer to 0.5%. The same thing has happened with investments in upskilling and reskilling of the workforce and upgrading the country's infrastructure. These lower investment rates have major implications for the employment and earning power of the workforce. For example, declining infrastructure means that workers could be less productive and earn less per hour of work, which could lead to a widening income inequality. Why are the advanced economies making lower investments in these critical areas? One key reason is the sociodemographic trends of the past few decades and how those are squeezing the government budgets. When retirement systems such as Social Security or health care programs like Medicare were created, the U.S. population was much younger. The anticipated number of years that people would receive retirement payments and health care benefits was much shorter. As medical science resulted in amazing innovations like antibiotics, vaccines, and other advancements, life expectancy increased from around 59 in the 1930s, when Social Security launched, to around 79 by 2020. One other key culprit for lower public sector investments is tax revenues that have not kept up with this increased spending. Starting in the 1950s, corporate income tax revenues as a share of GDP have declined due to a combination of lower rates and increased loopholes. The resulting budget deficits from this disparity of growth between spending and revenues has led to lower public sector investment rates. As any business leader can attest, planning over the last few months has been a roller coaster. Until the final fate of the tariffs and fiscal policies is determined, making long-term plans for capital expenditures or expansion will be difficult. Even then, the long-term forces such as lower public sector investments may mean greater challenges in achieving business objectives due to lower innovation rates, an under-skilled workforce, or deteriorating infrastructure. Any long-term planning will need to account for the impact of these factors on that business. For example, a severe shortage of doctors and nurses will mean that medical centers will need to rely on technologies like AI to automate many of the activities performed by those roles today. Priority one for corporate leaders will be adjusting business strategy and operations to respond to the new realities of increased volatility from an uncertain trade policy and squeezed profit margins. However, they should be mindful of the bigger picture, as no business can thrive in a crumbling economy, no matter how great the strategy. As such, it's time for America's business leaders to use their platforms and influence to advocate for the sound policies that created the prosperity of the last 80 years. These policies include public sector investments, predictable trade policies, support for our research institutions, and respect for the rule of law.
Indian Express
3 days ago
- Business
- Indian Express
For IMF and World Bank, on Pakistan, a query
As tensions between India and Pakistan escalated, attention moved to the ways in which multilateral agencies (such as the IMF) wanted to be economic saviours for a near rogue nation — this, despite warnings that good money might actually be chasing bad money in a vicious loop. With the World Bank reiterating that it will provide $20 billion over the next 10 years to Pakistan, followed by the IMF's largesse to Islamabad, these multilateral agencies need to introspect about the need and justification for such aid. In fact, the track record of these Bretton Woods twins, which came into being after the Great Depression of the 1930s and World War II, in truly helping countries weather economic storms and meet developmental goals remains somewhat questionable. Our neighbour's current borrowings from the IMF stand at close to $8.5 billion (Special Drawing Rights of $6.3 billion) — around 35 per cent of this has been in recent years. There is now a real risk of the fresh borrowings from the World Bank (or at least a part of it) being used to repay the existing debt — this is similar to many Ponzi schemes. The beauty of a Ponzi scheme lies in its being too good to be true when the going is smooth. In principle, the IMF's Extended Fund Facility (EFF) provides financial assistance to countries facing serious medium-term balance of payments problems — it helps them address and implement structural reforms. The World Bank's lending targets seemingly philanthropic causes — from education and child nutrition to climate resilience. Inter alia, the surveillance and monitoring mechanism devised by the benevolent lenders, who need to account for and explain the spending of each dollar to wider stakeholders globally, needs to be in lockstep. However, the data supplied by the countries receiving such assistance rarely undergoes rigorous scrutiny — either at these hallowed agencies or through credible third parties. This undermines transparency. Pakistan's FCF (Federal Consolidated Fund) maintained with the country's State Bank, is, at face value, akin to any such fund held by federal governments in most parts of the world. Established under Article 78(1) of Pakistan's constitution, the fund is defined by its preamble as all revenues received by the federal government, all loans raised by that government, and all money received by it for the repayment of any loan. However, under Article 82 of Pakistan's constitution, the lower house of the country's parliament can only discuss the FCF — it has no voting rights. In contrast, India mandates that withdrawals from the Consolidated Fund of India should have parliamentary approval — this ensures transparency and accountability, apart from due diligence through an independent CAG audit. The lack of transparency in Pakistan raises larger questions on the end usage of the funds and the IMF/WB's willingness to walk the extra mile as prudent lenders. The issue, however, moves beyond transparency and accountability when seen from a governance perspective. In FY 2024-25, Pakistan allocated nearly $10 billion for defence spending, marking an 18 per cent jump over the previous year. Despite a weak economy, the country features regularly among the top arms-importing countries year after year. Ironically, while its per capita income has fallen ($1,459 in 2023 from $1,653 in 2018, according to the IMF), Pakistan's per capita defence spending stands at a whopping $41 in 2024. (In case of India, it is $60 while its defence budget was more than $86 billion in 2024 as per SIPRI data). To cut a long story short, the question is whether the loans (or grants) provided by these agencies are helping Pakistan, explicitly or implicitly, in spending disproportionately large amounts on defence procurements that ensure the nourishment of an overarching military regime, and strengthen its nefarious connection with corruption — the average citizen is a sufferer. The withdrawal of excess funds for defence could be camouflaged from the Consolidated Fund in the guise of ticking the box of some worthy cause (because the fund has little oversight from democratic mechanisms). Given the state of Pakistan's economy, World Bank data showing that defence spending is 3.5 per cent of the country's GDP look like fudging of the balance sheet. Even as India lodges strong protests over the end use of such aid, with the very real possibility of the misuse of debt financing as funds for cross-border terrorism, one is reminded of Pakistan being given a clean chit by the FATF in 2022 — this facilitated its transition out of the 'grey list'. Oddly enough, the FATF had then emphasised that Pakistan was taken off the list in the wake of Islamabad's 'high-level political commitment' to reform its existing monitoring mechanism. The FATF needs to heed India's warnings — cautioning the world to ensure that Pakistan must continue to take 'credible, verifiable and irreversible' action against terrorism. It could use this warning as a roadmap in alignment with the protocols of the Asia Pacific Group on Money Laundering, of which Pakistan is a member. Two issues need specific attention. First, democratic nations need to shed the moral dilemma they have in removing restraints against a nation that pledged to eat bread made of grass in order to become a full nuclear state, while also diverting funds to run a deep state-sponsored proxy war. Second, the proliferation of unrestricted economic terrorism is a matter of grave concern. Pakistan could be using the assistance provided by these agencies to create an Iraq-like situation. In other words, there is an urgent need for strict collaborative international supervision of its stockpiles as clandestine nuclear black markets thrive globally, posing a risk to world peace and security. The threats have multiplied with the elevation of Asim Munir as Field Marshal — signalling the increased probability of the beleaguered nation going back to military dictatorship. A word of caution for those who grossly fail to read between the lines dictating India's new normal: The honour of the country is no longer subjugated by the terms of trade. The writer is member, 16th Finance Commission and group chief economic advisor, State Bank of India. Views are personal
