CBOE’s volatility index continued to remain elevated, but little changed at 22.5 while the US 10-year Treasury note yields fell 8 basis points (bps) to 2.76%. From a high of 7.80%, the yields dropped to a low of 7.29% by Tuesday. While the reduced borrowing in the H1 of FY 2019 appears to be a reaction to the firm yields and reduced appetite, the fundamental challenges remain. The reduced borrowing will leave little room to accommodate fiscal uncertainties down like GST collections, states’ payout of HRA, MSP for agricultural produce and above all the risks from an average or sub-par monsoon. The base effect should keep CPI in the 5-5.5% range for Q1 and therefore, nothing much to expect for growth-enablers, in the monetary policy.

Source: dna April 02, 2018 00:11 UTC