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Srivastava expects the benchmark Brent crude contract to rise above $100 per barrel, with the 10-year U.S. yield hitting 5%. This would give a good opportunity to build fresh 10-year India bond positions, he said.
The US Federal Reserve, in a widely expected move, skipped a rate hike at its FOMC monetary policy meeting concluded on September 20. However, the Federal Reserve's stance was hawkish as the Central Bank increased the projected rate for 2024 to 5.10% from 4.60%, which implies a rate cut of 50 bps as against the previous estimate of a 100 bps rate cut.
Markets are focusing on comments from Governor Kazuo Ueda's post-meeting briefing for clues on how soon the bank could phase out the massive stimulus programme of his predecessor. As widely expected, the BOJ maintained its short-term interest rate target of -0.1% and that for the 10-year bond yield around 0% at a two-day meeting that ended on Friday.
The near term looks a bit clouded due to narrowing yield spreads, FII selling and relatively high valuations. Here’s how investors can deal with the inevitable short-term volatility
"One of our core investment beliefs is that reversion-to-mean is natures law. To put simplistically - cycles do exist, almost everywhere. They vary in timing and frequency. Mid and small cap segments have gone through a long phase of underperformance as against their larger peers over the last few years. Midcaps demonstrate a higher vulnerability to the economic environment as well as market sentiments."