Aloha !! I had a fantastic session in tennis today. Practiced the front hand technique with 400 balls trying to roll the ball and swing perfectly. Also practiced the serve at which I suck. Just can't bring myself to toss the ball correctly. Putting my mind and muscle to it.. it'll come through !!
Now to the matter of markets, I'd say pretty well behaved.. haha
On the US side of things, Initial claims for the week ending December 3 increased by 4,000 to 230,000 and continuing claims for the week ending November 26 increased by 62,000 to 1.671 million (highest level since February 2022). After the sharp 21 bps drop in 10Y US yields, yields stabilized and moved higher to trade at 3.45% cmp. Similarly, the 2Y yield dropped from highs to 4.4150% to 4.2550% and currently trades at 4.28%. The 2x10 curve inversion trades at 83 bps, levels last seen in the year 2000.
The US will release the PPI report today, CPI report on Dec 13 and on Dec 14, FOMC rate decision. Unless the above data materially surprises on the dovish side, expect the 4.20 % - 4.40% range to hold on 2Y and 10Y to face significant resistance at 3.40% levels.
Coming back to India, post the hawkish policy, rates continue to be sticky despite sharp declines seen in oil prices. Cut off price for today's Gsec auction will be an important catalyst for gauging demand to assess if the 7.20% - 7.50% range will break. From a liquidity stand point, advance tax outflow and GST payments are likely to push the liquidity into deficit and hence short tenor OIS could continue to be paid. CPI data will be released on Monday.
USDINR is breaking below the 82.20 support and decisive close below 82.20 could see gains extend towards 81.90.
Have a super day ahead !!
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