Finance Minister Nirmala Sitharaman’s Feb. 1 budget may set the gross borrowing 11% higher at 16.5 trillion rupees ($180 billion) in the fiscal year starting April 1, according to the median estimate of 21 economists in a Bloomberg survey.The rise, driven by large debt maturities of about 5.5 trillion rupees, comes as heavy state government issuance pushes up yields. Higher Net borrowing, which excludes repayments, will be a tad higher at 11.6 trillion rupees, according to the poll. While economists expect ...

Fiscal Deficit and Economic Projections - The fiscal deficit is estimated at 4.2% of GDP for FY27, with the government's borrowing cost expected to be between 6.8-7% [1] - Nominal GDP growth for FY27 is projected at 10.5-11%, influenced by rising international commodity prices affecting wholesale inflation [1] - Capital expenditure is projected to exceed ₹12 lakh crore in FY27, reflecting a year-on-year growth rate of 10% [1] Tax Revenue and Borrowing Trends - Personal income-tax collections are expected to continue surpassing corporate tax collections in the FY27 Budget [2] - Gross market borrowing over the next five fiscal years is estimated at ₹93.8-95.2 lakh crore, indicating a need for alternative borrowing sources such as small savings [2] Medium-term Fiscal Strategy - The central government has established a medium-term fiscal consolidation roadmap, aiming to reduce the debt-to-GDP ratio to 56.1% in FY26 from 57.1% in FY25 [5] - The government is committed to a declining trajectory for central government debt towards around 50% (± 1%) of GDP by March 2031, barring major external shocks [5] - The report recommends that state governments adopt medium-term, scenario-based debt-to-GSDP paths aligned with realistic growth assumptions and development needs [5]

Gold (GC=F) rose close to $5,000 per ounce on Friday while silver (SI=F) touched $100 in what has been an epic rally for precious metals. Bullion is headed toward its best week since 2020, gaining 13% year-to-date. Goldman Sachs noted private sector investors have been getting in on the epic rally in addition to central banks' accumulation of gold. Strategists cite a weaker US dollar, expectations of Federal Reserve easing, large fiscal deficits, and fading demand for government debt. Earlier this week ...

Fiscal Policy Shift - The Indian government is shifting its focus from targeting the fiscal deficit to targeting the debt-to-GDP ratio starting April 2026, which is expected to support growth through a more modest pace of tightening [1][9] - The fiscal deficit is targeted to decrease to 4.4% of GDP for the year ending March 2026, down from 9.2% in 2020-21 [1][9] Debt Targets - Economists from Bank of America Securities project that the government will aim for a debt target of 55% of GDP by 2026-27, compared to the current level of approximately 57% [2][9] - Deutsche Bank and Axis Bank anticipate a fiscal deficit of 4.25% and 4.2%, respectively, with a long-term goal of reducing the debt-to-GDP ratio to 50% by 2030-31 [9] Borrowing Forecast - Gross borrowings are expected to rise to a record high, estimated between 16 trillion rupees and 17.50 trillion rupees ($174.7 billion to $191.1 billion), compared to 14.6 trillion rupees in the current year [5][6][9] - Net borrowings are projected to remain stable at 11.5 trillion rupees [6][9] Market Impact - The Indian bond markets are facing pressure due to heavy supply from federal and state government bonds, coinciding with a decline in demand from major buyers like insurance companies and pension funds [7][9] - Traders predict that if federal gross borrowing exceeds 16 trillion rupees, the trend of supply pressure will continue, with Nomura expressing caution regarding bonds due to these dynamics [8][9]

Core Viewpoint - JPMorgan Chase & Co. CEO Jamie Dimon expresses short-term optimism about the economy while remaining concerned about long-term geopolitical risks and fiscal deficits [2][3][6]. Economic Outlook - Dimon indicates a positive short-term outlook for the economy, citing a resilient American consumer and a robust labor market despite some cooling [2]. - He attributes current economic momentum to fiscal policy, specifically referencing significant stimulus from government spending [3]. Fiscal Concerns - Dimon warns about projected annual budget deficits of $2 trillion, stating that endless borrowing is unsustainable and will eventually have negative consequences [4]. - He predicts that bond markets will face challenges in absorbing this debt, although the timing of such an event is uncertain [5]. Geopolitical Risks - Dimon emphasizes that geopolitical issues now take precedence over domestic economic data in his concerns, expressing greater worry about global conflicts than the economy [6]. - He advocates for the U.S. to maintain its global leadership role, cautioning against a shift towards a bilateral world that undermines multilateral systems like NATO and the EU [7].

Colombia’s government has signed an economic emergency decree to raise funds to address a widening fiscal deficit, local media reported on Friday https://t.co/aB68MeTvPd ...

Trade and Geopolitical Factors - Trade deal timeline is uncertain, influenced by geopolitical developments more than bilateral trade issues [1][2] - A trade deal agreement would significantly boost Indian market sentiment by removing risk premium [4] - Trade uncertainties impact GDP projections, but domestic economy and exporter diversification mitigate negative effects [5] Economic Growth and Reforms - India's potential growth has likely increased due to decade-long structural reforms, including public infrastructure investment, digital infrastructure rollout, GST, and insolvency/bankruptcy code [8] - The economy has consistently outperformed expectations in the last five years post-COVID, suggesting potential for continued positive surprises in fiscal year 2026-2027 [11] - RBI estimates India's growth at 73% for fiscal year 2025-2026, and predicts around 67% for the next fiscal year [10] Consumption and Household Savings - Consumption is expected to strengthen, particularly in urban India, supported by GST reform and direct tax relief [12][14] - Rural consumption is performing well due to successive good monsoons and real wage/income growth [12][13] - India's household savings rate has increased from 49% of GDP in 2022-2023 to 6% of GDP, indicating improved household balance sheets [15] Rupee and Inflation - Weaker rupee improves the Indian trade balance on a net basis, offsetting import costs and benefiting exporters [17][18] - Rupee weakness reflects investor caution and is undervalued relative to India's economic fundamentals [20][22] - The rupee could be undervalued by 5% to 15% in real effective terms [24] - Lower inflation is seen as beneficial for the Indian economy, reflecting the impact of structural reforms on supply-side constraints [32] Aviation Industry - Recent disruptions in the aviation sector, such as flight cancellations, are expected to lead to better systems and resilience in the long run [38] - The long-term impact of aviation issues on Indian domestic and foreign tourism is not expected to be significant, given growing market and purchasing power [40]

Malaysian Prime Minister Anwar Ibrahim said he expects the country’s debt pressures to ease beginning end-2028, driven by the government’s efforts to reduce its fiscal deficit. https://t.co/zVCcR1UaER ...

Core Insights - The interest-rate markets are experiencing increased trading activities, with expectations for continued opportunities into 2026 due to macroeconomic factors [1] - Major Wall Street banks like JPMorgan, Bank of America, and Goldman Sachs are projected to see rising fixed-income trading revenues in the upcoming quarters [2] - Divergent interest rate policies among global central banks are prompting investors to rebalance their portfolios, leading to heightened trading activity [4][5] Company Performance - For the nine months ending September 30, 2025, JPMorgan's fixed-income market revenues rose 14% year-over-year to $17.2 billion [3] - Bank of America reported a 9.6% year-over-year increase in its fixed-income, currencies, and commodities trading revenues [3] - Goldman Sachs experienced an 8% year-over-year increase in its fixed-income trading revenues [3] Market Dynamics - Rising fiscal deficits are leading governments to issue more bonds, increasing trading volumes in the bond market [7] - A steepening yield curve, where long-term interest rates rise faster than short-term rates, is driving various trading behaviors such as hedging and speculation [8] - The increase in fixed-income trading activities is expected to benefit major dealers like Goldman Sachs, JPMorgan, and Bank of America [6]

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