U.S. Treasury prices rose, with yields easing across the curve, as shares of First Republic Bank collapsed, which raised fears that the regional banking crisis is yet to get over. U.S. consumer confidence also fell to a nine-month low in April fuelling worries of a recession, which may force the Fed to reverse its aggressive rate hikes soon. The Fed policy decision is due on May 3, with odds of a rate hike eased to below 80% from above 90% at the start of the week. The two-year U.S. yield plummeted by around 20 basis points to near-3.90% levels, while the 10-year yield fell over 10 bps on Tuesday and was at 3.40%. A dovish Fed may also provide similar comfort to the Reserve Bank of India which maintained a status quo on rates earlier this month. Bets of easing inflation have cemented bets of a prolonged pause. India's March retail inflation dropped to 5.66% and is set to ease below 5% in April. Bond yields have been trending downwards over the last few sessions as foreign banks have stepped up buying on hopes of a policy pivot.
These banks have bought bonds worth over 150 billion rupees ($1.83 billion) on a net basis in the last six sessions, data from Clearing Corp of India showed. New Delhi to raise 310 billion rupees via sale of bonds on Friday. ($1 = 81.9675 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Sohini Goswami)
