Over the past few weeks, the economy of India has been in focus because of various factors such as decline in INR, slowdown in industrial image001production, etc. We keep reading a lot of articles that suggest that the policies of current government are responsible for this state of affairs.

A.Seshan in Businessline points to this known but seldom reported trend ongoing in India – inverted yield curve in G-sec markets:

A typical yield curve should be upward sloping indicating that the higher returns/rates/yields should be provided for taking higher risks which are generally over the long term. Similarly, lower returns/rates/yields should be for lower risks which are generally short term. In short, longer the time frame, higher should be the rate/yield that you should earn. Continue reading