The main theme across the globe in general and US in particular is high inflation. The central banks globally have remained hawkish to tame multi-year high inflation. The US Fed since March 2022 has increased the policy rate by 225 basis points to take it to the range of 2.25-2.50%. India’s 10-yr G-Sec yield remained flat in August 2022, whereas US 10-yr yield hardened by about 62 basis points. Post Jackson Hole Symposium, US Fed Chair Powell gave very hawkish guidance and through this, yields across the globe spiked.
India’s sovereign yields remained almost flat over last one month. Between beginning of August to 01 September, the 10-yr G-Sec yield for India came down by about 2 basis points.
On the other hand, the US 10-yr yield between beginning of August to 01 September hardened by about 62 basis points. The central banks globally have remained hawkish to tame multi-year high inflation.
The US Fed since March 2022 has increased the policy rate by 225 basis points to take it to the range of 2.25-2.50%. As per the Fed’s latest dot plot, the median Fed Fund rate is projected to be at 3.38% in 2022 and 3.75% in 2023.
Post Jackson Hole Symposium that concluded last week, the US 10-yr yield increased by about 15 basis points as US Fed Chair Powell gave very hawkish guidance and was categorical in stating the FOMC’s focus would be to bring inflation within its target of 2%. Yields soared across the globe with UK 10-year yield moving up by about 30 basis points since the Symposium.
Similarly, German 10-year yield was about 20 basis points up. However, Chinese yields remained more or less unchanged due to the stimulus it has been receiving from its government and central bank. China cut its key lending rates in August 2022. 1-year and 5-year prime lending rates were cut by 5 and 15 basis points to 3.6% and 4.3% respectively.
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