"Also, we do not see much case for the central bank to continue hiking rates now. So yields should trade with downward bias going ahead." The 10-year U.S. yield was at 3.44%, while the two-year yield, a closer indicator of interest rate expectations, was at 3.88%. Fed funds futures are now pricing in a 41% chance for a 25 basis-point hike and 59% for rates being left unchanged. The odds for a 25 bps hike had increased to over 80% last week. On Sunday, the UBS Group AG bought Credit Suisse for $3.23 billion. This was followed by major central banks, including the Fed and European Central Bank, releasing statements to reassure markets.
The Fed offered daily currency swaps to ensure banks in Canada, Britain, Japan, Switzerland and the euro zone have the dollars needed to operate. The Reserve Bank of India's policy decision is due April 6 and markets feel a Fed pause could lead to a similar action by the local central bank. The RBI has raised the repo rate by 250 bps since March 2022 to 6.50%.
Traders also await the borrowing calendar for April-September, likely to be announced next week. The government's borrowing may be between 55% and 58% of its target for the next financial year, and the meeting with the RBI will be on March 27, two government officials said. (Reporting by Dharamraj Dhutia; Editing by Sohini Goswami)
