"We are at very critical levels for the benchmark, and further upside break could bring in the possibility of 7.50% on the cards," a trader with a state-run bank said.
U.S. Treasury prices slumped, with the 10-year yield hovering at the 4.00% handle as strong economic data led investors to price in higher interest rates. The yield hit 3.97% earlier in the day, which is its highest level in over three months, as bullish data and hawkish comments from Federal Reserve officials raised bets of higher rates for longer in the battle against inflation. The Fed has raised the policy rate by 450 basis points (bps) since March and is expected to raise it by at least another 50 bps, with many pricing in a 75 bps hike.
Still, major focus will remain on the minutes of the RBI's Monetary Policy Committee, which had raised the repo rate for the sixth consecutive time earlier this month, taking it to 6.50%, and kept the door open for more tightening. The RBI will increase its main interest rate by 25 bps to 6.75% in April and then pause until the end of 2023, according to a Reuters poll of economists, which also flagged risks of the terminal rate going even higher. Roughly two-thirds of the respondents, 34 of 55, expected the central bank to raise rates to a seven-year high of 6.75% in April. (Reporting by Dharamraj Dhutia; Editing by Dhanya Ann Thoppil Editing by)
