India’s Sovereign Bond Market In Trouble As Inflation Rebound Surprises

By Tyler Durden

Another day and another Indian inflation reading comes in “hotter” than markets expected. Yesterday, India’s CPI printed at 3.58% for October 2017 – its highest level in seven months – versus the consensus expectation of 3.43%. The September 2017 reading was 3.28%, itself marking a strong rebound from the recent low of 1.46% in June 2017. Market chatter was that the prospect for a rate cut by the Reserve Bank of India (RBI) when it meets on 5-6 December 2017 was fading.

That prospect faded further today with the release of the wholesale price data for October 2017. The 3.59% year-on-year increase was well above the consensus estimate of 3.01%. As with the CPI, the rebound in energy prices was a major factor in the surge in wholesale prices. Fuel, power and lighting prices rose by 10.52% year-on-year, food prices rose by 4.30% and manufactured products by a more modest 2.62%. The latest CPI and wholesale price data should, however, provide the RBI’s monetary policy committee with the clarity it’s wanted on the inflation path, even if the growth outlook remains more opaque. According to Bloomberg.

This will be the last price print for the Reserve Bank of India before its …read more

Source:: ZeroHedge