Making Sense

For India, WPI rose 0.27% mom with Food masking the otherwise deceleration in prices of non food article / Fuel and Power / Manufactured Products. System Liquidity Deficit stood at Inr 224K crore and WACR traded at 6.69%.  The Governor of the Reserve Bank of India met with senior management from Public and Private Sector Banks, emphasizing vigilance in areas such as risk management, customer protection, and financial stability. Yield on IN10s opened lower at 7.10% after the 7.14% peak seen yesterday.  US yields pulled back sharply which could be attributed to the Fed Speakers dovish tone / lower Dec PPI revision and expectations of a softer PCE reading. S&P lifted off lows to close 0.90% higher on the day. The market is currently pricing in 97 bps of rate cuts into 2024.  Yields High Low Close DoD ▲ US 2Y          4.67      ...

On INR, liquidity has been progressively easing to a deficit of 100K crore. RBI today announced a second VRRR of Inr 50K crore as overnight rates drop towards the lower end of the interest rate corridor. Weighted Average Overnight Call rates were seen at 6.35% yesterday. RBI will announce the monetary policy decision tomorrow. More to follow on the next posting on India Rate Outlook.  I posted the below chart post the NFP release and US yields were seen pulling back on a solid $54 bn 3Y Auction. The next auction is scheduled for Wednesday $42 bn in 10Y and $ 25 bn in 30Y. Risk sentiment stabilized and USD index pulled back from 104.60 highs. No other data of note today. On Friday, we have the U.S CPI revisions followed by CPI release next week.  The NY Community Bancorp continued to fall , down 60% since Jan 30 and the KBW Regional Bank Index down 12% since Jan 30.  Fed's Mester comments reiterated the post FOMC narrative. She stated that " If the economy evolves as expec...

"Success Comes down to rare moments of opportunity. Be open, alert, and ready to seize them" Equity Markets took a beating last night and US yields rose. Market pared the bets on Fed Fund Cuts as the implied pricing for Fed Fund Rates shifted higher from lows of 166 bps to currently 155 bps. Despite the disruption in the Red Sea, crude continues to chop around. British Oil Giant Shell halted shipments via the Red Sea. Christopher Waller in his speech titled “As good as it gets… But will it last” spoke about progress in inflation, improved supply demand in labor markets and tighter financial conditions and restrictive monetary policy. Towards the end of the comments, he said “This cycle, however, with economic activity and labor markets in good shape and inflation coming down gradually to 2 percent, I see no reason to move as quickly or cut as rapidly as in the past. The healthy state of the economy provides the flexibility to lower the (nominal) policy rate to keep the real...