Hi Goodmorning !!
Had a good tennis training session! Back to the markets now ..
Yesterday, in the post market hours , USDINR traded a low of 82.3575 on sharp decline in crude oil prices as markets assessed the EU price cap on Russian oil to be comfortable and that most of the Russian crude oil purchases are well within the $ 60 / barrel price cap. U.S reported trade deficit of $ 78.2 bn on deterioration in exports and strength in imports. The data shows the continued resilience of the US economic activity which added to lingering concerns that Fed may over tighten and trigger a deep recession. Comments from Jamie Dion that a mild to hard recession could hit next year did not help the equities sustain the recent gains. The US 2Y yield fell 7 bps while the 10Y yield fell 10 bps with the curve inversion at record highs of 82 bps.
On the domestic front, we have the MPC rate decision scheduled at 10:00 am which I have covered in my previous post. The consensus is for a rate hike of 35 bps to 6.25%, stance to be focused on withdrawal of accommodation. The liquidity is continues to be comfortable with the surplus at 85k crore. As per the liquidity management framework, in the corridor system the endeavor is keeping the liquidity in a deficit mode ( surplus or deficit of 0.25% - 0.50%) if expected to persist should be offset by durable liquidity operations. Hence, looking at crude oil prices and ensuing relief on the trade front, expect some liquidity operations to be announced.
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