TMS Ep395: IPCC final warning, extreme summer, gold stock, T-bills

The United Nations’ Intergovernmental Panel on Climate Change, or IPCC, has issued its final warning. Climate efforts by nations are not enough to limit global warming to 1.5 degrees Celsius above pre-industrial levels. And, it is becoming harder to contain the average temperature rise below 2 degrees Celsius. What are the implications of this warning? And, is there a way forward? 

From global warming, we now talk about another alarming climate issue — the blistering summer that India is likely to face. This summer is most likely going to be a hot one. Not to mention, February was the hottest since 1901. This will put a strain on the country’s resources. Grain output, particularly wheat, which is in its procurement season, will be a key aspect. There will also be a spike in power demand. So, is India ready for an extreme summer?  

Prices of gold have jumped 8% in less than two weeks, as investors looked for cover in a volatile environment. Recessionary fears further inflated the price of the yellow metal to life-time highs of 60,000 per 10 gram earlier this week. However, as the US Federal Reserve grapples with a banking crisis, amid sticky inflation, where will gold prices head in the near term? 

Treasury bills or T-bills are short-term debt instruments issued by the Centre in three tenors, that is, 91 days, 182 days and 364 days. In the last six weeks, the 364-day T-bill yield has risen by 58 basis points amid high uncertainty over interest rate hikes and worsening liquidity in the banking system. On Wednesday, the 365-day T-bill yield in India rose above the benchmark 10-year bond, signalling a yield curve inversion. The Reserve Bank of India sold 364-day notes at a 7.48 per cent yield, the highest since October 2018. So, what are T-bills and what does inversion of yield mean? This episode of the podcast brings you the answer.