Monthly macro tracker — April 2026

US 2Y–10Y spread at +52bp — yield curve remains positively sloped, a structural recovery signal from the 2023–24 inversion. But current steepening is “bear steepening” (10Y rising on inflation fears, not growth). India 10Y G-Sec at 6.90% — highest since July 2024 — surging on oil-driven inflation expectations, fiscal concerns, and Bloomberg bond index inclusion delays.

• US yield curve at +52bp — structurally positive (un-inverted from 2024 trough). Historically precedes EM equity re-rating by 6–12 months. But bear steepening (US 10Y rising from inflation premium) limits equity P/E expansion.
• India 10Y real rate: 6.90% − 3.21% CPI = +3.69% — historically high. Compelling long-duration entry if oil shock is transient. But India March CPI print (April 13) is the risk event: 4.5%+ reading pushes G-Sec toward 7.0–7.25%.
• RBI OMOs (₹3.5L crore in FY26) actively fighting the yield rise. OMO support expected through Q1 FY27. RBI owns the yield curve — disorderly spike above 7.25% will be met with intervention.

DXY at 100.1 (Apr 6) — structurally weak dollar but back above 100 on strong March NFP (178k jobs). India paradox: USD/INR at ₹93.21 despite a weak dollar — FPI outflows ($3.2B first week of April) and surging oil import bill driving rupee depreciation entirely independent of DXY dynamics. Forex reserves down $40B from February peak to $688.1B, still providing ~11 months import cover.

• INR at ₹93.21 — 4-year low. March 2026 saw record FPI equity outflow of ₹1,17,775 crore. First week of April already ₹23,801 crore outflow. RBI selling USD to defend the rupee, bringing reserves from $728.5B (Feb peak) to $688.1B in 6 weeks.
• Structural DXY weakness (Fed -175bp since Sep 2024, US fiscal expansion, de-dollarisation) is an EM tailwind medium-term. DXY below 98 = strong positive for INR and EM flows into India.
• DXY at 100 is the hinge: below 98 = dollar bear confirmed, INR recovers toward ₹88–90; rebound above 102 = reversal signal, compounding INR weakness. May Fed decision is the catalyst.

US CPI March 2026 confirmed at 2.8% YoY — the first print to capture the oil shock (energy +8.2% MoM). India CPI February 2026 at 3.21% (new base year 2024=100) — benign pre-war data. India March CPI is due April 13 and will be the first print to show the full oil and INR pass-through. Nomura estimates 4.0–4.5% if oil sustains $100+.

• US CPI 2.8% includes energy +8.2% MoM and core 2.5% — oil shock is hitting services through transportation costs. J.P. Morgan: CPI 3.5%+ by year-end if Brent sustains $100+. The Fed’s 2% target is receding, not approaching.
• India CPI April 13 print is the most important near-term data event. At $109 oil vs $70 pre-war baseline, implied India CPI add is +1.6–2.4% through the energy and transport channel. A 4%+ print formally closes the RBI cut window for FY27.
• India food inflation at 3.47% (Feb 2026) remains the structural offset. Benign food prices have held overall CPI well inside the RBI band. If food stays low, it partially absorbs the oil shock — the critical variable to watch alongside CPI.

Fed balance sheet at $6.7T (Apr 2 H.4.1 release) — QT has effectively paused; no active balance sheet reduction. 175bp of Fed cuts since Sep 2024 have materially loosened global monetary conditions. RBI domestic system surplus ~₹75,000 Cr/day, below the ₹2L Cr (1% NDTL) comfort zone but direction is right. Global liquidity structural tailwind is building; the Iran shock is a temporary dam, not a drought.

• Fed QT paused at $6.7T — no active balance sheet reduction. Combined with 175bp of cuts since Sep 2024, global monetary conditions are meaningfully looser than 12 months ago. The structural tide toward risk-on is intact.
• Iran shock creates a “liquidity trap” for India: global easing should attract FII debt flows via carry trade, but oil-driven INR weakness and CPI risk are overwhelming the carry argument. FIIs selling India despite improving global liquidity backdrop.
• RBI OMOs through Q1 FY27: each ₹50,000 Cr OMO purchase adds ~20bp to system liquidity. RBI has both the tools and intent to prevent domestic liquidity crunch. Expect ₹1–2L Cr OMOs in April–May 2026.

Three scenarios. One key binary — Iran deal or no deal. Structural India fundamentals (7%+ GDP, ₹29,845 Cr SIP, ₹17.2T capex, benign food inflation) are intact in all three. The Iran shock has now persisted five weeks at $100+. Every week of sustained $100+ oil shifts probability toward Scenario C.

US-Iran military conflict (began March 2026) has effectively closed the Strait of Hormuz — through which 21% of global oil supply (~20mb/d) transits. Brent surged from $63 (Dec 2025 low) to $119.50 peak (Mar 2, 2026). April 2026 data: open $104.86 on April 1, currently $109.00 (April 4–6). WTI above $111. IEA: biggest supply disruption since 1973. Iran backchannel talks continuing; Trump called discussions “very good” (Mar 9); Iran approved Indian LPG tankers (Apr 2).

• Strait of Hormuz: near-halt, not full closure. IEA confirms 12–15mb/d disrupted (US exports, Saudi routing changes partially compensating). Full formal closure pushes Brent to $130+. OPEC+ Saudi/UAE have 2–3mb/d spare capacity but no commitment to emergency increase yet.
• India triple-hit: (1) CAD at risk of widening 1.0–1.5% of GDP at $109 vs $70 baseline, (2) CPI +40–60bp per $10/bbl rise = +1.6–2.4% cumulative add, (3) fiscal pressure if Centre cuts petrol/diesel excise to control retail prices (₹1.5–2T revenue cost).
• Watch: Iran backchannel signals. US SPR release (0.6mb/d capacity) and IEA coordinated release could cap near-term spike. Any ceasefire announcement = $20–30/bbl immediate relief and a sharp India market re-rating.
• Historical comparison: 1973 embargo lasted 5 months; 1979 Iranian revolution disruption lasted 12 months. Current disruption at week 5 — if it persists beyond week 8–10, structural demand destruction and global recession risk increase materially.