Investors attention is likely to be cued on to the US inflation data to offer more guidance on possible path for interest rates
Jahnavi Prabhakar,
Economist,
Bank of Baroda
Mumbai, February 12, 2024: Investors attention is likely to be cued on to the US inflation data to offer more guidance on possible path for interest rates. The Central Bank might be forced to delay its plan for any interest rate cuts (Possibly in May’24), if inflation turns out to be hotter than anticipated. Retail sales and labor market data will also warrant the attention of investors this week. Separately, inflation in Germany (3.1% vs 3.8%) and France (3.4%-2 year low) eased, fuelling bets of interest rate cuts by ECB. BoJ’s Governor in his recent remarks stated they might continue with the accommodative conditions for a longer period even if it abandons the negative interest rate policy. On domestic front, investors will track inflation and industrial production data.
Global yields inched up. Yields in US were impacted by investor sentiment ruling in a favour of Fed keeping rates higher for longer, while eyeing Jan’24 CPI data due this week. Probability of Fed delaying rate cuts has increased and it is believed that other Central Banks may follow the suit. India’s 10Y yield rose by 3bps, but is trading a tad lower at 7.10% today.
(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.)