The yield on 10-year US treasury bills breached the psychologically crucial 5% mark on Monday – the highest since July 2007 – bringing back memories of the 2007-08 financial crises. The spike came on the back of fears that the US Federal Reserve will keep rates higher for a longer period.
Last week, US Federal Reserve Chairman Jerome Powell said inflation in the US continues to be too high and bringing it down to the Fed’s 2% target level will likely require a slower-growing economy and job market. His hawkish comments came against market expectations that the rate hikes had reached an end.
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Economists believe that there will an adverse impact of US yields will be felt in the Indian markets as well. “There would be an upward pressure on Indian bond yields since the unfavourable interest rate differential would mean reduced inflows into non-US bond markets,” said Abheek Barua, ch…