European finance ministers have warned the US that the tax cuts are against international treaties and undermines trade. Similar concerns have been expressed from China. Perhaps the US tax cuts would lead to a series of competing fiscal dole outs across the globe pushing yields higher along with growth, with the potential to make 2018 a bullish risk year like we have not seen in the last 11 years. Oil prices (Brent) moved higher than 65 on the back of supply concerns which in the short term will create pressure on oil importing currencies.
USDINR 1m NDF is trading flat while EM currencies have mildly depreciated since yesterday. India bond yields have headed to 7.23% in a hurry, led by domestic selling as market expects inflation to go higher than 4.3% in today’s release. There are also expectations of the government announcing extra borrowing in the next fortnight for the March quarter (20-30k crores). Oil prices would maintain the pressure on INR for the day along with moderately negative equities in Asia. CMP 64.51, Range 64.45-64.63.
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