10Y Yields In China, US, And UK Fell The Most

Sensex is trading higher today

Sonal Badhan,


Bank of Baroda

Mumbai, March 19, 2024: Stronger than expected housing starts data in the US has raised uncertainty around Fed’s timing and quantum of rate cuts. Housing starts rose to 1.52mn units in Feb’24 (est.: 1.43mn units), up from 1.37mn units in Jan’24. Bulk of this demand comes from single family units which rose to 1.13mn units in Feb’24—highest since Apr’22. Single family unit building permits (indicator of future construction activity) also jumped to 1.5yr high. Businesses are offering discounts and compromising on size of the units to negate the impact of high mortgage rates. Separately, optimism in Germany has returned as Germany’s ZEW economic sentiment jumped in Mar’24 to 31.7 (est.: 20.5) from 19.9 in Feb’24. Domestically, RBI’s monthly bulletin stated that with the help of improving corporate balance sheets, government’s capex thrust and structural improvements in private demand, India can sustain 8% growth momentum.

Global stock indices ended mixed, as investors monitored the landmark decision by BoJ of ending negative rates. The focus will now shift towards upcoming Fed meet. Wall Street made strong gains, followed by Nikkei. On the other hand, Sensex ended in red and was dragged down by losses in IT and power stocks. However, it is trading higher today, while other Asian stocks are trading mixed.

§  Except CNY (flat), other global currencies ended lower against the dollar. DXY continues to climb up (0.2%) with the spotlight now on speech by Fed Chair to offer guidance on rate outlook. JPY weakened to near 4-month low, post BoJ’s decision. INR depreciated amidst higher oil prices. However, it is trading stronger today, while other Asian currencies are trading mixed.

Barring India, other global 10Y yields inched down. Yields in China, US, and UK fell the most. Investors keenly await Fed’s rate decision (due today), to gauge whether the 1st rate cut will be delivered in Jun’24 or not. The chances remain uncertain following strong housing starts report. India’s 10Y yield rose by 1bps, due to inch up in prices. It is trading flat today at 7.10%.

(The views expressed in this research note are personal views of the author(s) and do not necessarily reflect the views of Bank of Baroda. Nothing contained in this publication shall constitute or be deemed to constitute an offer to sell/ purchase or as an invitation or solicitation to do so for any securities of any entity.)

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