On domestic front, Bloomberg Index proposed to include Indian bonds (FAR) to be part of the EM local currency Index from Sep'24, which would support more flows
Dipanwita Mazumdar
Economist,
Bank of Baroda
Mumbai, January 9, 2024: Global markets reacted to a multitude of factors. Fed Governor (Michelle Bowman) spoke of rate cuts if inflation continues to fall towards Fed’s 2% target, to prevent policy from being way too restrictive. Elsewhere, in China, further monetary stimulus may be forthcoming to provide impetus to growth. On macro front, New York Fed 1-year inflation expectations moderated, showing that expectation remaining closely anchored. In Germany, factory orders moderated on a sequential basis, while exports and imports picked pace. In Japan, CPI in Tokyo slowed for the second straight month, in line with BoJ’s view of subsiding import-driven price pressures. On domestic front, Bloomberg Index proposed to include Indian bonds (FAR) to be part of the EM local currency Index from Sep’24, which would support more flows. Thus, India’s 10Y yield could see some downward bias going forward.
Global currencies closed mixed. DXY fell by 0.2% as investors await more data to gauge the trajectory of Fed rates. EUR closed flat despite a pickup in Eurozone’s consumer confidence index. INR ended a tad stronger, tracking lower oil prices. It is trading further stronger today, in line with its Asian peers.
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