Market Information Monday 23 March 2026

India’s macroeconomic stability is under strain as the central bank has spent over $20 billion defending the rupee, which has fallen 2.6% during the conflict, while foreign reserves dropped to $555 billion and the RBI’s forward book surpassed $100 billion in short positions. With India importing 90% of its crude and half its gas, surging energy prices threaten to widen the current account deficit to 2.5% of GDP, weaken the rupee toward 95 per dollar, and push bond yields up toward 7%, raising risks of broader financial‑market stress. Capital outflows exceeding $10 billion and potential declines in $50 billion of Gulf remittances further intensify pressure, making the rupee the de facto shock absorber as the conflict persists.

Soaring oil prices, with Brent touching $108.65 and intraday swings as high as 10%, are driving investors out of equities and traditional safe havens and into money‑market funds, which now hold roughly $8 trillion in assets. Concerns over inflation, stagflation risk, and eroding returns on bonds and gold have made ultra‑short‑term Treasury funds attractive as they offer yields above 3% to 4%, reinforcing a broad “wait‑and‑see” stance across markets. This rush to cash underscores growing fear that sustained energy‑driven price shocks could weigh heavily on consumer spending, earnings, and overall economic growth.

UK borrowing costs have spiked sharply, with 10‑year gilt yields hitting 5%, their highest level since 2008, as soaring oil and gas prices from the Middle East conflict raise the risk of a renewed inflation shock. Markets now expect multiple rate hikes instead of cuts, pushing two‑year gilt yields to 4.57% and driving mortgage rates and household energy bills higher, which threatens consumer spending and increases recession risk. The jump in yields also strains public finances, with the UK set to issue £252 billion in gilts this year while already paying more than £100 billion annually in interest, limiting fiscal space and potentially forcing further tax increases.

The 6M Euribor increased with 1 basis point to 2.32% compared to previous business day. The 10Y Swap increased with 9 basis points to 3.07% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.