In an interview to CNBCTV18, Sameer Goel, head-Asia macro strategy at Deutsche Bank, spoke at length about money markets and the impact of coronavirus.

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Speaking about coronavirus impact, he said, “In the last week, two key things have happened – first, concern about the epidemic has shifted from it being just focused on China or Asia region into to it being a lot more global. And along with it, the notion that this cannot be treated as -- what it was in the first instance -- just a shock from an economic perspective to tourism, trade and even China-related supply chain but also potentially now a demand shock in multiple economic centers around the world, which has much deeper ramification.”

“Second and probably more related to the point on how low yields have got, we haven’t seen policymakers in many places necessarily respond proactively to what has been the market expectation. So the market curve has moved substantially ahead, for example on Fed the markets are pricing in 3 rate cuts this year. The street revising its expectations. We too now believe that there is going to be likely a rate cut from Fed once in March and once in April. So expectations of Fed cutting in March is very much on the table,” he added.

When asked about expectations from RBI, Goel said, “The markets at the moment are effectively pricing in about one cut or a slightly more than a cut. We now think that the probability is that there is going to be more than one. Our economist believes 15 bps cut in April which is going to be partly signaling in some sense and then followed through by another cut in June.”

“Therefore, I suspect the street will gradually think about multiple cuts for India just like it is doing now or a lot of other central banks,” added Goel.

On the 10-year and currency front, he said, “We have had a long hailed forecast for 10-year yields in India at about 6.25 percent and we are not revising that at the moment.”

“After having traded in 70-72/USD range for the last several months, the risk more for dollar index is to shift to a somewhat higher range rather than lower. It’s a very fluid situation though,” Goel added.