1.74%: Peak yield level touched by 10-year US Treasury last week.

Business Standard
24th March

1.74 per cent: Peak yield level touched by 10-year US Treasury last week.

  • The spike in US bond yields is beginning to hurt investor sentiment in the Indian equity market. Recently the 10-year US Treasury yield touched 1.74 per cent, the highest in 14 months (it is currently at 1.70 per cent).
  • One factor that is pushing up yields in the US is commodity inflation. If bond yield in the US continues to rise, it could have a far-reaching impact.
  • Central banks will be forced to reverse their easy monetary policies. Though the US Fed has pledged not to hike rates for some time, it could be forced to revise its view if inflation is very strong.
  • Rising yields in the US tend to be negative for emerging markets.
  • If foreign portfolio investors can get a high rate of return in a relatively safe asset like US treasury, they may not want to invest in developing market equities, which are deemed to be a much riskier asset class.

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