Cheaper oil and a new central bank governor widely seen to have a dovish bent helped local bonds and the rupee rebound from a selloff toward the year-end. “Markets as usual always price-in moves ahead of the actual events and if you see a rate cut, the market may not rally much further,” said Amandeep Chopra, head of fixed income at UTI Asset Management Co., which oversees about $22 billion. UTI Asset prefers short-term debt over long-tenor paper because it doesn’t expect the RBI to aggressively ease its monetary policy. Barring traditional investors like pension funds and insurers, mutual funds are not so active as they are not adding duration in the current environment.”On oil prices:“Oil remains the joker in the rates outlook. What helps us is that the average cost of crude would be much lower than what it was in 2018.”

Source: Mint January 08, 2019 07:30 UTC