U.S. Treasury yields rose on Tuesday after consumer prices showed inflation accelerated in January, data that raised market expectations of a tighter Federal Reserve monetary policy in the coming months. Headline prices increased 0.5% month-over-month, after gaining 0.1% in December, while core prices rose 0.4%.
The Fed has raised interest rates by 450 basis points (bps) since 2022 and is widely expected to further raise them by 50 bps over the next three months.
Meanwhile, local bond market sentiment remained cautious
after retail inflation in January jumped to 6.52%, above the
RBI's upper threshold for the first time since October.
The RBI, last week, raised the repo rate for the sixth
consecutive time by 25 bps to 6.50% and kept the door open for
more tightening after saying that core inflation stayed
"sticky".
The one-year overnight indexed swap rate, often seen as the
clearest indication of future policy rates, rose to the highest
level in three months, signalling that another interest rate
hike is likely in April, analysts said.
KEY INDICATORS:
** Brent crude futures down 0.3% at $85.35 per
barrel, after rising 1.2% in previous session
** 10-year U.S. Treasury yield at 3.7492% and
two-year note at 4.6175%
** RBI to auction Treasury Bills worth 290 billion rupees
($3.50 billion)
($1 = 82.9010 Indian rupees)
(Reporting by Dharamraj Dhutia; Editing by Sohini Goswami)
