The 10-year U.S. yield hit a four-week high on Monday after blowout employment numbers raised expectations that the Federal Reserve's interest rate hikes will not end with a hard economic landing, and that the U.S. central bank may have more than one more rate increase left. The two-year yield jumped 16 basis points on Monday, after rising 21 bps on Friday on rising expectations of more rate hikes. It was last at 4.43%.
Fed funds futures traders now see rates rising above 5% in May. On Thursday, traders had expected the rate to peak at 4.88% in June, and then fall to 4.40% by December.
Indian states aim to raise 202.50 billion rupees ($2.45
billion) through sale of debt later in the session. This would
be followed up by sale of 80 billion rupees of green bonds on
Thursday and 300 billion rupees of central government bonds on
Friday.
Meanwhile, the Reserve Bank of India's Monetary Policy
Committee will announce its decision on Wednesday, and will
likely raise its key interest rate by 25 bps to 6.50%, a Reuters
poll of economists showed.
"Global rate hike cycles are close to peaking though the
central banks remain cautious. We expect the MPC to hike by a
last 25 bps to push the real rate comfortably into positive.
This would help the RBI to be on a prolonged pause as it
assesses the lagged impact of the past rate hikes," said
Suvodeep Rakshit, senior economist at Kotak Institutional
Equities.
KEY INDICATORS:
** Brent crude futures up 0.9% at $81.70 per barrel,
after rising 1.31% in previous session
** 10-year U.S. Treasury yield at 3.62120% and
two-year note at 4.4245%
** Twelve Indian states to raise 202.50 billion rupees through
sale of bonds
($1 = 82.7220 Indian rupees)
(Reporting by Dharamraj Dhutia; Editing by Nivedita
Bhattacharjee)
