Rate-hike bets in India escalate ahead of possible global tightening

Five-year interest-rate swaps jumped 63 basis points in February, reflecting growing expectations of a tighter monetary policy

The global economic recovery is fueling speculation central banks will soon be shifting into tightening mode -- nowhere more so than India.

Five-year interest-rate swaps jumped 63 basis points in February, the biggest advance since the 2013 taper tantrum, reflecting growing expectations of a tighter monetary policy. Swap rates signal India will see the most rapid tightening of any nation in Asia, according to Standard Chartered Plc. Fears of a resurgence in inflation driven by rising oil prices is adding to the speculation.

“The market is swept up by high intensity global reflation trade,” said Suyash Choudhary, head of fixed