Economic Weekly Wrap
12 Jan 2026 - 16 Jan 2026

Global markets remained cautious eyeing geopolitical tensions globally. Within days of the Venezuela crisis, political unrest in Iran resurfaced over possible government crackdown. The repercussion was felt in major global asset classes. Gold and silver are trading at record high levels in today’s session. DXY is also hovering at its 1- month high. International crude prices also firmed up. Among major data releases in the US, consumer credit edged down and housing starts showed sequential decline. Labour market conditions remained weak with change in non-farm payroll rising at a moderate pace by 50K against previous month’s of 64K. This has built up hopes of a softer monetary policy by Fed with two rate cuts priced in this year. On domestic front, CPI data is scheduled to be released, which is expected to be below RBI’s lower tolerance band of 2% (BoB est.: 1.4%).

Stocks in the US rose as investors assessed the jobs report and its implication for Fed policy. Nikkei rose by 1.6%, led by gains in real estate and banking stocks. Chinese stocks found comfort from an uptick in CPI data. Sensex remained under pressure and dipped by 0.7%. Real estate and power stocks led the decline. It is trading further lower today, in line with other Asian peers.

Table 1 – Stock markets

Source: Bloomberg, Bank of Baroda Research

Except CNY, global currencies depreciated against the dollar. DXY rose by 0.2% tracking the labour report. JPY declined on reports of a possible snap parliamentary election. INR depreciated by 0.2% on persistent FPI outflows and tariff jitters. It is trading further weaker today, in line with Asian currencies.

Table 2 – Currencies

Source: Bloomberg, Bank of Baroda Research

Global yields closed mixed. Markets remained cautious over questions of Fed’s independence and persistent geopolitical tensions globally. UK’s 10Y yield fell the most amidst risk off sentiments. US 10Y yield closed stable eyeing host of data releases. India’s 10Y yield inched up a tad eyeing the auction results of reissued securities. It is trading at 6.63% today.

Table 3 – Bond 10Y Yield

Source: Bloomberg, Bank of Baroda Research

Table 4 – Short Term Rates

Source: Bloomberg, Bank of Baroda Research

Table 5 – Liquidity

Source: RBI, Bank of Baroda Research

Table 6 – Capital market flows

Source: Bloomberg, Bank of Baroda Research

Note: Mutual Fund data as of 5 Jan and 6 Jan 2026. Oil prices rose on supply concerns amid tensions in Iran and Russia-Ukraine.

Oil prices rose on supply concerns amid tensions in Iran and Russia-Ukraine.

Table 7 – Commodities

Source: Bloomberg, Bank of Baroda Research

Global markets remained watchful on account of concomitant factors at play. US President announced imposition of 25% tariff on countries having any trade relations with Iran. The question over Fed independence also remained the focal point. In Japan, anticipation started building up over a likely snap election. In UK, BRC sales data, a proxy for retail sales of the region rose at a modest pace. In Japan, current account balance widened recording a higher surplus in goods trade balance. In the current week, all eyes with be on US CPI data for cues on trajectory of Fed fund rate. On domestic front, CPI data came in at 1.3% in Dec’25, remaining below RBI’s lower tolerance band for the 6th consecutive month in a row. Thus, building up hopes of further monetary easing in the current cycle.

Global stocks ended higher. Stocks in US rose, led by gains in consumer staples and technology shares. Nikkei also surged tracking a decline in yen. In India, Sensex snapped a 5-day losing streak to end 0.4% higher on optimism over US trade deal. Gains were concentrated in metal and oil and gas stocks. However, it is trading weaker today, while other Asian stocks are trading higher.

Table 1 – Stock markets

Source: Bloomberg, Bank of Baroda Research

Table 2 – Currencies

Source: Bloomberg, Bank of Baroda Research

Global yields closed mixed. US 10Y yield inched up a tad ahead of the CPI data. Germany’s 10Y yield softened amidst risk off sentiments. India’s 10Y yield closed lower by 3bps supported by a below 2% CPI print. It is trading further lower at 6.58% today as rate cut expectations got priced in.

Table 3 – Bond 10Y yield

Source: Bloomberg, Bank of Baroda Research

Table 4 – Short term rates

Source: Bloomberg, Bank of Baroda Research

Table 5 – Liquidity

Source: RBI, Bank of Baroda Research

Table 6 – Capital market flows

Source: Bloomberg, Bank of Baroda Research

Oil prices edged up on supply concerns amidst continued unrest in Iran

Table 7 – Commodities

Source: Bloomberg, Bank of Baroda Research

Global markets assessed the ongoing turmoil in Iran, political developments in Japan and a benign inflation report in the US. Oil prices rose as civil unrest in Iran continued. In Japan, reports of a snap election as early as Feb’26 raised hopes of further fiscal stimulus. In the US, CPI inflation increased by 0.3% in Dec’25 (MoM), in line with market expectations. Core CPI rose by 0.2% in Dec’25. While investors expect the Fed to maintain status quo on rates this month, expectations of two more cuts this year remain intact. In China, export growth picked up to 6.6% in Dec’25 (est. 3%) from 5.9% in Nov’25. Imports too accelerated to 5.7% from 1.9% rise in Nov’25. In 2025, China posted a record trade surplus of US$ 1.2tn, despite higher tariffs. World Bank has lifted India’s growth forecast for FY26 to 7.2% from 6.3% projected earlier, on the back of strong domestic demand and tax reforms. For FY27, growth is projected at 6.5%.

Global indices closed mixed as investors continued to track ongoing geopolitical developments. US indices closed lower with losses noted in financial stocks as concerns pertaining to a possible cap on credit -card rates. Sensex ended lower with losses in power stocks. It is trading lower today, while other Asian indices are trading mixed.

Table 1 – Stock markets

Source: Bloomberg, Bank of Baroda Research

Global currencies ended weaker. DXY rose by 0.3% as investors assessed the CPI report. JPY depreciated further tracking political developments. INR ended flat. However, it is trading stronger today, in line with Asian peers.

Table 2 – Currencies

Source: Bloomberg, Bank of Baroda Research

Global yields closed mixed. US 10Y yield closed flat tracking latest US CPI print. Inflation has come in line with expectations. India’s bond yields inched up following news that it will take some more time for Indian bonds to get included in Bloomberg Global Aggregate Index. It is trading further higher at 6.64%

Table 3 – Bond 10Y yield

Source: Bloomberg, Bank of Baroda Research

Table 4 – Short term rates

Source: Bloomberg, Bank of Baroda Research

Table 5 – Liquidity

Source: RBI, Bank of Baroda Research

Table 6 – Capital market flows

Source: Bloomberg, Bank of Baroda Research

Note: Mutual Fund data as of 8 Jan and 9 Jan 2026

Oil prices rose further amidst escalating tensions between US and Iran.

Table 7 – Commodities

Source: Bloomberg, Bank of Baroda Research

Among the major developments, have been the US-Taiwan trade deal with lower tariff of 15% (previous 20%) agreed on goods from Taiwan. Further, an investment pledge of US$ 500bn has also been announced by Taiwan. Elsewhere, weakness in Japan’s currency continued against the possibility of a snap election. Japan’s Finance Minister also voiced concerns about the same. On macro front, US jobless claims data softened to 198K for the week ending 10 Jan against the previous level of 208K, due to seasonal factor. The 4-week moving average number is also showing moderation. In UK, monthly GDP data inched up by 0.3% in Nov’25 against previous month’s contraction of -0.1%. On domestic front, India’s trade deficit was broadly steady at US$ 25bn in Dec’25 (US$ 24.5bn in Nov’25). Exports rose by 1.9%, while imports increased by 8.8%, led by non-oil-non-gold imports.

Global indices closed mixed. US indices ended higher as stellar earnings report from major banks lifted financial stocks. Upbeat macro data also boosted sentiments. In Asia, stocks tumbled as investors continued to monitor developments in Iran. However, markets recovered in today’s session driven by a revival in tech stocks. Sensex is also trading higher today.

Table 1 – Stock markets

Source: Bloomberg, Bank of Baroda Research, Note: Indian markets were closed on 15 Jan 2026

Except CNY, other global currencies depreciated. DXY rose by 0.3% as strong labour data and commentary from Fed officials have pushed back expectations of a rate cut in Apr’26. GBP depreciated the most despite a positive GDP report. INR is trading weaker today, in line with other Asian currencies.

Table 2 – Currencies

Source: Bloomberg, Bank of Baroda Research, Note: Indian markets were closed on 15 Jan 2026

Global yields closed mixed. UK’s 10Y yield rose the most tracking the pickup in GDP data. US 10Y yield also inched up as initial jobless claims data showed some buoyancy in labour market conditions. Japan’s 10Y yield softened tracking weakness in yen. India’s 10Y is trading at 6.67% today

Table 3 – Bond 10Y yield

Source: Bloomberg, Bank of Baroda Research, Note: Indian markets were closed on 15 Jan 2026

Table 4 – Short term rates

Source: Bloomberg, Bank of Baroda Research, Note: Indian markets were closed on 15 Jan 2026

Table 5 – Liquidity

Source: RBI, Bank of Baroda Research, Note: Indian markets were closed on 15 Jan 2026

Table 6 – Capital market flows

Source: Bloomberg, Bank of Baroda Research

Note: Mutual Fund data as of 8 Jan and 9 Jan 2026

Oil prices fell as supply concerns eased after US President’s comments on Iran.

Table 7 – Commodities

Source: Bloomberg, Bank of Baroda Research