Global bond flows compass Not out of the woods

Research evidence excerpt

Global bond flows compass Not out of the woods

Fixed Income ● Rates

19 June 2026

Emerging Markets (EM): EM local-currency debt delivered a total return (FI+FX) of 1.21% over

the past week. The US-Iran deal and expected reopening of the Strait of Hormuz have eased

some pressure on EM assets. However, the outlook has been tempered by a hawkish Fed and

the prospect of a stronger US dollar. Upside risk to policy expectation is likely to persist across

EMs, to ease potential currency pressures and curb inflationary risks. We therefore remain

cautious towards broad EM fixed income assets and favour selective positioning driven by

idiosyncratic country factors. In terms of foreign demand, inflows were recorded across EMs

over the past week, except for Hungary.

Foreign demand concentrated in belly of India government bond curve in June: The FX

stabilisation measures announced by the Reserve Bank of India at the June MPC have driven

sizeable foreign inflows into Indian government bonds (Gsecs) so far in June (USD2.5bn). This is

also the largest monthly foreign inflow since January 2025 (see Figure 5). Total foreign

purchases of Gsecs under the Fully Accessible Route (FAR) have reached USD3.5bn, while non-

FAR Gsecs have seen foreign outflows of USD1bn. The outflows from non-FAR Gsecs reflect the

reclassification of the 15Y and 30Y benchmark bonds from the non-FAR category to FAR.

Looking at foreign buying across tenors, foreign demand for long-dated bonds (Gsecs maturing

in more than 10 years) has increased gradually in the week of 11–18 June (see Figure 7).

Inflows into this segment rose to 33% of total foreign buying during 11–18 June, up from 7% in

4–11 June. That said, the bulk of inflows remains concentrated in the belly of the Gsec curve

(bonds maturing in 5–10 years).