Asia Press Agency

Tag: US Treasury Yields

  • Indian Government Bond Yields Surge on Rising Oil Prices

    Indian Government Bond Yields Surge on Rising Oil Prices

    On Thursday, September 28, Indian government bond yields witnessed a significant surge, marking their most substantial single-session rise in 2023. This increase was attributed to several factors, including the relentless climb in oil prices, rising US Treasury yields, and concerns surrounding the possibility of another US government shutdown, according to a report by Reuters.

     

    The 10-year benchmark 7.18 percent 2033 bond yield closed at 7.2414 percent, a notable uptick from the previous session’s 7.1704 percent. This marked the most significant single-session rise since November 3, 2022.

     

    Market analysts have noted that the elevated US yields and soaring oil prices, combined with the looming threat of another US government shutdown, have collectively weakened overall market sentiment, creating a bearish mood. Yogesh Kalinge, Vice President at AK Capital Services, expressed the possibility of strong support emerging at the 7.25 percent yield level, as reported by Reuters.

     

    The consistent upward trend in US yields, particularly at the longer end, has been a contributing factor. The 10-year US yield has approached 4.65 percent, reaching a 16-year peak, driven by expectations that the US Federal Reserve will maintain higher interest rates for an extended period.

     

    September has witnessed the 10-year yield in India climbing by more than 50 basis points, impacting bullish bets and contributing to the shift in market sentiment. Additionally, the benchmark Brent crude oil contract has risen above $97.50 per barrel, marking its highest level since November 2022. This increase can be attributed to concerns about tight global oil supplies, exacerbated by a decrease in crude stocks in the United States. Analysts have pointed out that increased betting by market participants has kept crude oil prices higher in futures trading.

     

    These factors have effectively reversed the decline in bond yields that resulted from the bullish sentiment following JPMorgan’s recent inclusion of India in its emerging market debt index.

     

    Despite the challenges, India has maintained its plan to raise ₹6.55 trillion through bond issues in the October-March period. A maximum of ₹1.45 trillion will be raised through 10-year bonds, constituting 22 percent of the total borrowing, according to the report. This borrowing strategy aims to address India’s financial needs while navigating the evolving global economic landscape.

  • FIIs Extend Selling Streak as Sensex and Nifty Close

    FIIs Extend Selling Streak as Sensex and Nifty Close

    Foreign institutional investors (FIIs) continued their selling streak as Sensex and Nifty closed lacklustre on Tuesday, September 26, tracking weak global cues. The domestic institutional investors (DIIs) turned net buyers and invested ₹715 crore in Indian stocks today.

     

    As per the NSE data, FIIs cumulatively bought ₹8,750.81 crore of Indian equities, while they sold ₹9,444.28 crore — resulting in an outflow of ₹693.47 crore on Tuesday. Meanwhile, DIIs infused ₹7,502.47 crore and offloaded ₹6,787.72 crore, registering an inflow of ₹714.75 crore.

     

    The US Treasury yields hit a multi-year high and the US dollar rose to a 10-month high level amid concerns over interest rates staying high for an extended period and its impact on the global economy. This has largely supported the FII selling streak since August. In September so far, FIIs have sold ₹20,593 crore in Indian markets, while DIIs have invested ₹14,748 crore.

     

    Market analysts expect FII’s to continue selling in Indian markets as long as US bond yields are on an uptrend. Profit-booking in markets can continue over FII activity. Meanwhile, DIIs buying interest offsets the risk to a certain extent.

     

    ‘’The US 10-year bond yield climbing to a 10-month high of 4.54 per cent and the dollar index spiking to 105.94 are headwinds for the market. This is getting reflected in the sustained FII selling which has taken the net FII sell figure in September, so far, to ₹20,593 crore,’ said said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

     

    The buying by DIIs, at ₹13,748 crore, is supporting the market but is not strong enough to give confidence to the bulls. It remains to be seen how this tug of war plays out in the near-term,” added Dr. V K Vijayakumar.

     

    The US Federal Reserve, in its latest policy decision, held its overnight benchmark interest rate to 5.25 per cent – 5.50 per cent, however, it signalled that another rate hike is possible before the end of the year.

     

    “The Fed’s hawkish pause message has created a global risk-averse sentiment in global equity markets. The spike in the dollar index to 105.52 and the US 10-year bond yield shooting up to a 16-year high of 4.5 per cent are negative for equity markets, particularly emerging markets,” said Dr. V K Vijayakumar.

     

    Domestic equity benchmarks Sensex and Nifty settled lower on Tuesday due to select profit taking in IT and banking shares in line with weak Asian markets and continuous foreign fund outflows.

     

    Nifty 50 opened at 19,682.80 against the previous close of 19,674.55 and touched the intraday high and low of 19,699.35 and 19,637.45 respectively. Nifty 50 finally closed at 19,664.70, down 10 points, or 0.05 per cent. The Sensex closed 78 points, or 0.12 per cent, lower at 65,945.47.

     

    The BSE Midcap index also ended in the red, falling 0.09 per cent but the BSE Smallcap index managed to clock a gain of 0.33 per cent. IT stocks remained weak, falling 0.5 per cent on worries over demand uncertainties due to a higher interest rate environment in the US, a key market for Indian IT companies.

     

    Meanwhile, long-term investors can utilise the weakness in the market as an opportunity to buy high-quality stocks in financials, capital goods, and autos ignoring the near-term volatility in the market, according to analysts.

  • Wall Street Closes: Investors Await Fed’s Interest Rate Insights

    Wall Street Closes: Investors Await Fed’s Interest Rate Insights

    The week ended on a mixed note for Wall Street, with major indices showing minimal changes as investors remained cautious ahead of insights on interest rates from the Federal Reserve. The Nasdaq Composite slipped by 0.2%, the S&P 500 barely moved with a 0.01% decline, while the Dow Jones Industrial Average inched up by 0.08%.

     

    Amidst global markets hovering near two-month lows, the MSCI world equity index, tracking shares across 45 countries, registered a 0.24% decline at the latest check.

     

    After a recent surge, benchmark US 10-year Treasury yields experienced a decline, settling from their 16-year highs earlier in the week. Investors speculated that the robust US economy could prompt the Federal Reserve to maintain higher interest rates for an extended period.

     

    According to Blake Emerson, a global investment specialist at JP Morgan Private Bank, “August historically has been a weak month for markets, and it isn’t surprising that after a big rally to start the year, investors would take a breather. The headlines haven’t changed all that much, but the lens with which investors are viewing those headlines has,” as reported by Reuters.

     

    Despite touching a peak of 4.328% on Thursday, 10-year yields subsided to 4.255%. A breakthrough beyond the 4.338% level recorded in October would mark the highest yields since November 2007.

     

    The dollar index, reflecting the currency’s performance against a basket of six major rivals, dipped by 0.16%. Despite its daily decline, the dollar notched its longest winning streak in 15 months with a sixth consecutive week of gains.

     

    Recent minutes released from the Federal Reserve’s July meeting revealed that committee members continued to acknowledge strong upside risks to inflation. This suggests the possibility of upcoming rate hikes to control inflation.

     

    All eyes are now on the annual meeting of the Federal Reserve and other major central banks in Jackson Hole, Wyoming. Next Friday, Fed Chair Jerome Powell is anticipated to deliver a speech, closely observed by investors for signals about the future trajectory of interest rates.

     

    TD Securities analysts noted, “We view the event as a good opportunity for Powell to start laying the ground for the next step in the Fed’s policy guidance: no longer focused on how many hikes to expect, but rather on rates remaining ‘higher for longer,’” as reported by Reuters.