Federal Reserve Governor Christopher Waller pushed for a potential 50-basis-point increase in December if upcoming core inflation hits or exceeds 0.3%. Following these hawkish comments, two-year Treasury yields increased to 4.61%, while 10-year yields reached roughly 4.88%. Money markets have now completely priced in at least a quarter-point hike for the central bank's next gathering, up from an 80% likelihood recorded the week prior. In Asia, the Reserve Bank of India prompted domestic lenders to review bond-forward valuations, triggering industry-wide consultations to address billions of dollars in impacted assets.
Key points
Money markets have fully priced in a 25-basis-point Federal Reserve rate increase for the…: Money markets have fully priced in a 25-basis-point Federal Reserve rate increase for the upcoming December meeting.
European sovereign bond yields moved broadly downward during the session alongside droppi…: European sovereign bond yields moved broadly downward during the session alongside dropping crude oil prices.
The Reserve Bank of India instructed selected lenders to adjust bond-forward accounting m…: The Reserve Bank of India instructed selected lenders to adjust bond-forward accounting methods using Level 3 valuation inputs.
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The Fed should also consider an upsized half-point rate hike if the inflation picture worsens, Waller said.
October US inflation numbers are due out later on Tuesday.
India's central bank has informed some lenders about the need to adjust bond forward accounting practices. This change could impact billions of dollars in assets across the banking sector. The Reserve Bank of India suggested using Level 3 inputs for valuing bond-forward trades during recent audits. Banks have been in discussions with industry associations and clearinghouses for potential solutions and better pricing information.
Economists polled by Reuters forecast the core measure - which excludes volatile food and energy prices - likely increased by a moderate 0.2% last month from September, compared with a 0.3% rise a month before.
If core consumer prices rise 0.3% or more from September, "a stronger policy move may be needed," Waller said. "In that case, I believe a 50 basis point hike in the policy rate should be considered at the December meeting."
Two-year Treasury yields were up 6 basis points at 4.61% in London, while 10-year borrowing…
Investors are heavily reassessing credit exposure across the tech supply chain as Washington prepares for legislative clampdowns on data centers and artificial intelligence systems. The anticipated regulatory oversight threatens to cool aggressive financing models, raising worries over broader macroeconomic momentum. Lower-rated corporate debt tied to infrastructure projects is already suffering from widening spreads and falling prices.
A special committee of the board authorized the substantial capital infusion in accordance with Chapter V of the Securities and Exchange Board of India framework. The structure enables the promoter entity to steadily expand its ownership stake while providing structured funding to the non-banking financial company. This strategic allotment reinforces insider support through phased equity expansion.
Global investors redirected capital toward Indian equities as an intense sell-off hit artificial intelligence sectors across the United States and East Asia. Anticipated regulatory guardrails on data centre spending pushed funds into alternative markets, where domestic large-cap valuations and solid corporate earnings offered compelling stability. This reallocation provides immediate relief to local markets after enduring consecutive months of intense foreign liquidation.