Indian bond yields climb as US peers break key levels; debt sale eyed Indian government bond yields continued to witness fresh highs, after U.S. yields saw the breakout of key technical points on bets of more rate hikes, while fresh supply of debt locally pinned down investor sentiment further. The benchmark 7.26% 2033 bond yield was at 7.1624% as of 10:00 a.m. IST, after ending the previous session at 7.1464%. The yield hit 7.1755% earlier in the day, the highest since April 21. New Delhi plans to raise 390 billion Indian rupees ($4.72 billion) through the sale of debt later in the day. This would be the first auction for this quarter laden with debt supply. U.S. yields jumped on Thursday after labour market data further fuelled expectations that the Federal Reserve will aggressively raise interest rates as it tries to rein in persistently high inflation down towards its 2% target rate. Private payrolls jumped by 497,000 jobs last month, the ADP National Employment report showed, well above the 228,000 forecast and indicating the labour market remains resilient despite the Fed’s efforts to slow the economy. The report comes after the minutes of the Fed’s June meeting reiterated that more rate hikes are coming. The Fed had raised rates by 500 basis points in 10 consecutive meetings from March 2022 to May 2023, before pausing in June.The odds of an increase in July have now risen to around 89%, while that of another rate hike later in the year now stands at around 45%. The 10-year U.S. yield jumped to 4.08%, the highest in four months, while the two-year yield jumped to 5.12%, the highest in 16 years. The yields remained above the crucial 4% and 5% levels, respectively, on Friday
Logistics, good or bad, are driven by the states and the commerce ministry has a LEADS (Logistics Ease Across Different States) report, based on perceptions. The 2023 version was released in December. Since states are heterogenous, in the reporting, they are divided into four groups—coastal, landlocked, north-east, and UTs. States that do well are called achievers. Nomenclature matters. Thus, states that are middling aren’t called average. They are called fast movers. States that are sub-par are called aspirers. Let me highlight coastal states, since 75% of export cargo is estimated to originate from them. Among coastal states, ones that do well are Andhra Pradesh, Gujarat, Karnataka, and Tamil Nadu. The ones that lag are Goa, Odisha, and West Bengal. While India’s logistics performance may have improved over time, that’s not true of every state. Some have slipped. Most states have a state-level logistics policy, including Goa and Odisha. West Bengal, bottom of the pecking order in the coastal category, doesn’t have one. To quote from LEADS 2023, “Looking ahead, the State (West Bengal) could benefit from formulating a State Logistics Master Plan and State Logistics Policy to drive efficiency improvements and facilitate investments within the logistics sector and undertake consultation with the logistics stakeholders for educating and informing them about the initiatives State is undertaking for the development and improvement of logistics sector.”
Logistics has been talked about for a long time and India has also focused on improving performance. We are now getting some precise data on measurement and quantification. That helps.
Bibek Debroy, chairman, EAC-PM. Views are personal.