'Gilt funds offer a strong tactical opportunity'

Investors can take a tactical call on gilt funds due to attractive spreads, believes Vikas Garg, head — fixed income at Invesco Mutual Fund.

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He tells Christina Titus that the yield curve is expected to steepen further and 10-year benchmark yield to trade in the range of 6.60%-6.80%. Excerpts:

How do you see the bond market performing?

Fiscal supply has gained clarity now, with markets fully pricing it in alongside the end of the rate-cut cycle. Going forward, long-end yields will face supply pressure, but could ease with OMOs — I expect ₹3-4 lakh crore in FY27. The short-end will likely fall on liquidity and demand. The yield curve may steepen further, driven by short-end rally. We expect the 10-year yield to trade between 6.60% and 6.80% over the next few months.

How do you assess rate-cut transmission in the bond market?