Cost of money

Yields may remain elevated for an extended period

Financial markets continue to adapt to the expectation that the cost of money is likely to remain high in the foreseeable future. On Monday, the yield on 10-year US government bonds crossed the psychologically important level of 5 per cent after 16 years. This resulted in a correction in bond and equity markets across the world. In the Indian stock market, the benchmark BSE Sensex declined by about 1.3 per cent. The immediate reason for increasing bond yields can be attributed to the view that policy interest rates in the US will remain higher for longer. US Federal Reserve Chairman