U.S. headline consumer inflation index (CPI) rose 0.5% month-on-month in January and core inflation by 0.4%. While the month-on-month change in the headline and core inflation was in line with expectations, the annual rate was above estimates. "The CPI release is a hiccup to the disinflationary theme that is playing out," DBS Research said in a note.
"While the month-on-month measures were in line with
consensus, higher weight should be placed on the year-on-year
figure (which faced less distortions from tweaks in seasonal
adjustments)."
Interest rate futures have fully priced a 25 basis points
hike by the Fed in March and are almost certain of one more in
May. The Fed's terminal rate expectations reached to near 5.25% Fed officials said on Tuesday the U.S. central bank will
need to keep gradually raising interest rates to beat inflation
and suggested sticky price pressures driven by an upbeat jobs
market may push borrowing costs higher than they once thought. The 2-year Treasury yield rose overnight to above 4.60%, the
highest since November. Asian currencies and equities were
broadly lower.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 83.00;
onshore one-month forward premium at 11.50 paise
** USD/INR Feb futures settled on Tuesday at 82.83
** USD/INR Feb forward premium at 4.0 paise
** Dollar index up at 103.29
** Brent crude futures down 0.4% at $85.3 per barrel
** Ten-year U.S. note yield at 3.75%
** SGX Nifty nearest-month futures down 0.3% at 17,872
** As per NSDL data, foreign investors bought a net $181 mln
worth of Indian shares on Feb. 13
** NSDL data shows foreign investors bought a net $91 mln worth of Indian bonds on Feb. 13 (Reporting by Nimesh Vora; Editing by Dhanya Ann Thoppil)
