By Naval Kagalwala, COO & Head of Products, Shriram Wealth Ltd
“Amid steady economic growth and uncertainties from the ongoing war, the FOMC held its policy rates in the March policy meeting, maintaining the target range of 3.5-3.75%. In his post policy speech, the Chair noted a slower progress on inflation going ahead, while also undermining fears around stagflation. The dot plot showed an upward revision in both inflation as well as growth when compared with previous forecasts. Mr Powell noted that higher oil prices would put some downward pressure on spending and employment and upside risks to inflation, though these were said to be offset by higher energy production in the US.
Following Fed’ remarks on limited progress on disinflation, US 10Y Treasury yields moved up to 4.27%. In less than a month, the yields have moved up about 34 bps from an intra-day low of 3.93%. This could be a tactical opportunity for investors looking to invest in US$ fixed income paper. US equities were also down around 1.4%. India sovereign bond yields may witness a continued uptick in yields, while participants await the market borrowing distribution for FY27.”