Investment Rating - The report indicates a positive outlook for the Indian government bonds, expecting a 25 basis points cut in the repo rate, which will enhance the attractiveness of these bonds [21][24][30]. Core Insights - The Indian economy is moving towards a better growth-inflation balance, with improved consumption activity noted in April. The real GDP growth forecast for CY25 has been slightly raised to 6.3% year-on-year [21][24]. - Headline CPI inflation in March reached a 5.5-year low of 3.3% year-on-year, primarily driven by a decline in food inflation [21][24]. - Financial conditions in India have eased due to a combination of policy rate cuts and improved liquidity in the banking system, resulting in over 100 basis points of easing since January 2025 [21][24][30]. Summary by Sections Non-Farm Payroll (NFP) Insights - Economists estimate that nonfarm payrolls rose by 110,000 in May, which is below the consensus of 125,000 and the three-month average of 155,000. This indicates a potential slowdown in job creation [3][4][6]. - The unemployment rate is estimated to remain unchanged at 4.2%, with average hourly earnings expected to rise by 0.3% month-over-month [5][6]. Indian Monetary Policy Outlook - The Monetary Policy Committee (MPC) is expected to cut the repo rate by 25 basis points to 5.75% in the upcoming meeting, with further cuts anticipated in Q3 [21][23][30]. - The report suggests that the RBI may not want to maintain an ex-ante real interest rate below 1%, especially with a balanced growth outlook [23][24]. Currency and Market Dynamics - The report highlights that the Brazilian Real (BRL) and Mexican Peso (MXN) are expected to perform well in the emerging market currency space, particularly against the USD [2][4][14]. - The report also notes that the Swiss Franc (CHF) and Japanese Yen (JPY) have deviated from the regression model based on rate differentials, indicating potential trading opportunities [2][5].