Key Highlights:
Global:
- Despite Fed’s dot plot indicating 50 bps rate hikes in 2023, markets are pricing in one 25 bps rate hike in July.
- Further ECB and BoE rate hikes expected on account of elevated inflation and strong labour market.
- Waning recovery in China led to rate cuts by People’s Bank of China.
- EIA revised upwards Brent crude oil forecast for 2024 to $83.5/bbl.
- Dollar weakness likely to persist if incoming macro data points to weakness in the economy.
- US yield curve inversion deepened to levels last seen during the banking crisis in March.
Domestic:
- Rural demand showing signs of improvement; discretionary demand remains muted.
- Kharif sowing impacted by the deficient monsoon in most states in June.
- Retail inflation eased to a 25-month low of 4.3% in May; core inflation elevated.
- Net sales of corporates rose 10% (y-o-y) in Q4 FY23, but growth moderated for the 3rd quarter in a row.
- Operating profit margin rose to a 4-quarter high of 16.4% in Q4 FY23 amid easing price pressures.
- CAD moderated to 0.2% of GDP in Q4 FY23 from 2% in the previous quarter.
- Lower goods trade gap, upbeat services exports and remittances supported the moderation in CAD.
- Services exports jumped 28% steered by exports of software and business services.
- Rupee traded in a tight range despite depreciation of Chinese yuan.
- Bond yields rose tracking global yields after major central banks decided to continue raising rates.
