Add the Reserve Bank of India to the list of central banks that are moving to take away their extraordinary accommodation. They did not raise interest rates but increased the bank liquidity ratio, which is basically a reserve requirement, thus forcing banks to have a higher % of their capital in gov’t bonds which thus reduces the availability of money that can be lent out. They said they want to reverse the ‘unconventional’ measures but keep the ‘conventional’ ones. This thought is similar to the RBA. Asian stock markets are down in response with the Sensex specifically down more than 2% but their weakness also follows the US selloff. Norway is expected to raise rates 25 bps tomorrow. The Yuan quietly is falling to the lowest level in almost 2 months vs the US$ and is putting pressure on other Asian countries who compete with China. Case/Shiller HPI and Consumer Confidence are out today as is a 2 yr note auction.
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