TARIFF UNCERTAINTY MAKES IT A CAUTIOUS WEEK
Last week, the only meaningful data point was the core sector growth, which improved to 1.71% for June 2025; but the Q1FY26 core sector growth was subdued at 1.34%. Chris Waller of the FOMC gave the first hint of why a rate cut was needed in the 30-Jul Fed meet.
In terms of sentiments, the coming week will be the Friday deadline for reciprocal tariffs; with the Indo-US deal still elusive. In key data points, there is the Fed meet on 30-Jul; while IIP data and the fiscal deficit update for June 2025 will also be announced during the week.
The table captures US 10-year benchmark bond yields over the last 5 trading sessions.
| Date | Price (%) | Open (%) | High (%) | Low (%) |
| Jul 25, 2025 | 4.386 | 4.392 | 4.430 | 4.382 |
| Jul 24, 2025 | 4.408 | 4.384 | 4.442 | 4.382 |
| Jul 23, 2025 | 4.388 | 4.360 | 4.398 | 4.354 |
| Jul 22, 2025 | 4.336 | 4.380 | 4.398 | 4.328 |
| Jul 21, 2025 | 4.370 | 4.427 | 4.427 | 4.352 |
| Jul 18, 2025 | 4.431 | 4.443 | 4.451 | 4.416 |
Data Source: Bloomberg
The bond yields at 4.386% saw bond yields tapering after Chris Waller of the Fed suggested it was time for the Fed to cut rates to protect growth. There is a 60% probability of a 25 bps rate cut in CME Fedwatch, but US budget deficit post-OBBBA, could be an overhang. Last week, US 10-year bond yields touched a high of 4.442% and a low of 4.328%.
Here is the US dollar index (DXY), an index of dollar strength, over last 5 trading sessions.
| Date | Price (%) | Open (%) | High (%) | Low (%) |
| Jul 25, 2025 | 97.64 | 97.45 | 97.90 | 97.43 |
| Jul 24, 2025 | 97.38 | 97.18 | 97.55 | 97.11 |
| Jul 23, 2025 | 97.21 | 97.47 | 97.61 | 97.19 |
| Jul 22, 2025 | 97.39 | 97.87 | 97.99 | 97.31 |
| Jul 21, 2025 | 97.85 | 98.36 | 98.51 | 97.70 |
| Jul 18, 2025 | 98.48 | 98.49 | 98.57 | 98.10 |
Data Source: Bloomberg
The US dollar index (DXY) closed lower for the week at 97.64; well below the January 2025 peak of 110. Dollar fell after Chris Waller hinted at the need to cut rates to boost growth. Last week, the US dollar index (DXY) touched a high of 98.51 and a low of 97.11. The range of 98-99 is proving to be a strong resistance for the dollar index.
The table below captures 10-year India bond yields for the last 5 trading sessions.
| Date | Price (%) | Open (%) | High (%) | Low (%) |
| Jul 25, 2025 | 6.353 | 6.329 | 6.365 | 6.327 |
| Jul 24, 2025 | 6.329 | 6.312 | 6.330 | 6.312 |
| Jul 23, 2025 | 6.312 | 6.311 | 6.313 | 6.307 |
| Jul 22, 2025 | 6.308 | 6.300 | 6.309 | 6.294 |
| Jul 21, 2025 | 6.299 | 6.307 | 6.307 | 6.296 |
| Jul 18, 2025 | 6.305 | 6.300 | 6.309 | 6.296 |
Data Source: RBI
India bond yields inched up to 6.353%; as markets are veering to the view that RBI may wait and watch in its August MPC meet. RBI has already cut rates by 100 bps and CRR by another 100 bps, so RBI may just wait for the full impact to sink in and get transmitted. Last week, India 10-year bond yields touched a high of 6.365% and low of 6.294%.
The table captures the official USDINR exchange rate for last 5 trading sessions.
| Date | Price (₹/$) | Open (₹/$) | High (₹/$) | Low (₹/$) |
| Jul 25, 2025 | 86.503 | 86.432 | 86.641 | 86.405 |
| Jul 24, 2025 | 86.380 | 86.401 | 86.445 | 86.241 |
| Jul 23, 2025 | 86.380 | 86.328 | 86.471 | 86.284 |
| Jul 22, 2025 | 86.322 | 86.195 | 86.441 | 86.180 |
| Jul 21, 2025 | 86.195 | 86.134 | 86.362 | 86.132 |
| Jul 18, 2025 | 86.150 | 86.010 | 86.244 | 85.972 |
Data Source: RBI
This week, the USDINR weakened from ₹86.150/$ to ₹86.503/$; and spent the full week above the 86 mark, before closing above ₹86.50/$. Despite a fall in dollar index, the global uncertainty kept the Indian rupee under pressure. Last week, USDINR touched a high of ₹86.132/$ and a low of ͅ₹86.641/$, as oil company demand for dollars continued.
The table captures the Brent Crude prices over last 5 trading sessions.
| Date | Price ($/bbl) | Open ($/bbl) | High ($/bbl) | Low ($/bbl) |
| Jul 25, 2025 | 68.44 | 69.36 | 69.86 | 68.31 |
| Jul 24, 2025 | 69.18 | 68.74 | 69.54 | 68.49 |
| Jul 23, 2025 | 68.51 | 68.92 | 69.10 | 68.00 |
| Jul 22, 2025 | 68.59 | 69.08 | 69.12 | 68.12 |
| Jul 21, 2025 | 69.21 | 69.21 | 69.63 | 68.43 |
| Jul 18, 2025 | 69.28 | 69.55 | 70.77 | 69.14 |
Data Source: Bloomberg
The higher supplies from OPEC Plus and demand concerns kept crude prices under pressure. Brent crude never crossed above $70/bbl in the week, before closing at $68.44/bbl. Last week, Brent Crude touched a high of $69.86/bbl and a low of $68.00/bbl. Delays in oil movement poses the biggest supply chain constraint to oil.
The table captures the international spot prices of gold in dollars per troy ounce (oz).
| Date | Price ($/oz) | Open ($/oz) | High ($/oz) | Low ($/oz) |
| Jul 25, 2025 | 3,337.18 | 3,369.29 | 3,373.73 | 3,325.05 |
| Jul 24, 2025 | 3,368.15 | 3,387.79 | 3,393.47 | 3,351.40 |
| Jul 23, 2025 | 3,387.78 | 3,431.26 | 3,439.09 | 3,381.45 |
| Jul 22, 2025 | 3,431.50 | 3,395.81 | 3,433.56 | 3,383.29 |
| Jul 21, 2025 | 3,395.80 | 3,348.62 | 3,401.85 | 3,344.48 |
| Jul 20, 2025 | 3,349.14 | 3,349.23 | 3,350.17 | 3,345.01 |
| Jul 18, 2025 | 3,350.40 | 3,338.76 | 3,361.41 | 3,331.75 |
Data Source: Bloomberg
Spot gold prices were above $3,300/oz during the latest week. Spot gold did cross $3,400/oz during the week, but could not sustain higher levels as accumulation is tapering. During the week, gold touched a high of $3,439.09/oz and a low of $3,325.05/oz.
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