**Market Brief: Trade Pact Sparks Bond Rally** **Bond Yields Ease on US-India Deal** Indian government bonds rallied on Tuesday, with the benchmark **10-year yield softening to 6.72%**, down from a one-year high of **6.77%**. Buying sentiment was ignited by the announcement of a US-India trade agreement, which alleviated recent bearishness caused by heavy fiscal supply concerns. **Key Drivers** * **Tariff Relief:** The United States agreed to cut reciprocal tariffs on Indian goods from **25% to 18%** and scrap additional punitive duties, boosting investor confidence in domestic assets. * **Currency Strength:** The Indian Rupee surged **1.2% to 90.40** against the dollar—its strongest single-day rise in years—further supporting demand for rupee-denominated debt. **Supply Constraints Persist** Despite the trade-deal euphoria, gains were tempered by the Union Budget’s announcement of a record **₹17.2 trillion** gross borrowing target for FY27. Market participants utilized the price uptick to book profits, remaining cautious of the supply-heavy calendar ahead. **Outlook** While the trade pact provides immediate relief, the market remains focused on the Reserve Bank of India’s (RBI) liquidity management to absorb the massive sovereign debt supply projected for the coming fiscal year.