Debt Portfolio Positioning — September '26

Executive Summary

• We recommend rebalancing debt portfolios from long-duration to short / medium maturities to improve portfolio resilience.
• Rising global debt, persistent inflation risks and volatile long-term yields have increased uncertainty across debt markets.

What Has Changed?

1. Global debt levels continue to rise

Record public and private borrowing, sustained fiscal deficits and higher refinancing costs are placing increasing pressure on global debt markets, keeping long-term yields elevated and increasing volatility across countries.

2. US Treasury yields remain an important global risk

Heavy Treasury issuance and inflation uncertainty may keep US long-term yields elevated. US publicly held debt is projected to rise from 101% of GDP in 2026 to 120% by 2036, alongside growing fiscal deficits and interest costs.

3. Indian long-term yields remain exposed to multiple pressures

Global yields, crude-oil prices, inflation, government borrowing and geopolitical developments may continue to drive volatility at the longer end of the Indian yield curve.

Our Portfolio Positioning

• Reducing concentrated exposure to longer-duration strategies, which are more sensitive to changes in market yields.
• Increasing allocations towards shorter and intermediate maturities, which currently offer meaningful income with comparatively lower interest-rate sensitivity.
• Retaining selective intermediate-duration exposure to participate if inflation moderates and interest rates eventually decline.

What This Means for Investors

Our team will review your existing debt portfolio and reach out to you with the necessary portfolio-rebalancing recommendations, wherever required.

Any proposed change will be assessed in the context of your investment objectives, time horizon, liquidity requirements, tax implications and overall portfolio allocation.