Starting April, govt should not fool itself on small savings rate
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Most interest rates, including those of government bonds, have fallen steeply over the past one year. But since small savings schemes are administered rates, these have been kept unchanged. (Photo: AFP)
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Receipts from small savings securities funded as much as 26% of the fiscal deficit in FY21
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This was a circular the government could have slept over. The finance ministry issued a circular announcing steep interest rate cuts on small savings schemes on Wednesday night. The next morning, finance minister Nirmala Sitharaman tweeted that the circular was issued by “oversight and that interest rates stand unchanged.
Week Ahead: Rising Treasury Yields will make this an interesting FOMC decision
March 12, 2021SharePrint
The bond market seems determined to make this an interesting FOMC policy decision. Treasury yields have been surging after the Biden administration passed the $1.9 trillion COVID relief bill and set a May 1
st goal of getting vaccines to all adults. The Fed welcomes a steeper yield curve, but the current trajectory could be disruptive to the economic recovery. Market participants want to know how quickly do yields need to rise to raise concerns of tighter conditions or trigger disorderly markets? The taper tantrum might get priced in a lot sooner by Wall Street, but the Fed will patiently wait until economic indicators confirm the recovery remains much later in the year.
US
The US is still seeing disturbing news on the Covid front and the economy is starting to show further signs of weakness from the third coronavirus wave. Too many parts of the country are low on ICU beds and concerns are that the slow vaccine rollout will mean lockdown efforts may intensify in the coming weeks.
The Markit flash PMI readings are expected to show softness in both the manufacturing and service sectors. Initial jobless claims are clearly trending higher and could top a million this week. The housing market will remain the bright spot of the economy but both housing starts and existing home sales will show some seasonality weakness.
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