India’s 10Y yield is trading a tad lower at 7.26% today

Weaker macros in the US and commentary by ECB President on softer economic activity, also impacted sentiments

Aditi Gupta,

Economist,

Bank of Baroda

Mumbai, November 28, 2023: Providing fresh signs that the US economy may be slowing down, new home sales declined by 5.6% to 679,000 (est. 723,000). The 30-year fixed mortgage rate remains elevated at ~7.29%. Expectations that the Fed rates have peaked have strengthened, with investors now anticipating the possibility of a sooner-than-expected rate cuts. This has weighed on the dollar and treasury yields. All eyes are on the PCE data scheduled later in the week. Separately, growth in industrial profits in China slowed down to 2.7% in Oct’23, after increasing by 11.9% in Sep’23. Apart from US PCE data, focus will also be on OPEC+ meet, US and China’s official PMIs and Eurozone’s inflation data due in the week. In India, Q2FY24 GDP data is due.

• Global stocks ended lower. Investors remained cautious amidst rate cut bets by Fed. CME Fed watch tool is pricing in a probability of 23.1% of a rate cut in Mar’24 meeting. Weaker macros in the US and commentary by ECB President on softer economic activity, also impacted sentiments. In China, regulators spoke of weaker credit demand. Nikkei fell the most followed by Shanghai Comp. Sensex is trading higher today, while Asian stocks are trading mixed.
• Global yields closed mixed. US 10Y yield fell by 8bps as new home sales data remained weaker and expectation of future rate cut by Fed built up. Germany’s 10Y yield fell by 9bps as Q3 final estimate showed contraction in economic activity. Japan and China’s yield closed stable in absence of fresh cues. India’s 10Y yield is trading a tad lower at 7.26% today.
• Major global yields closed higher. 10Y yield of UK rose the most (+10bps) as UK treasury announced much smaller than expected cut in borrowings for the current fiscal year (-£500mn versus est.:-£15bn). Markets in US were closed. India’s 10Y yield rose to 7.26%, even as oil prices eased. It is trading further higher today at 7.27%.

(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.)