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Economic Weekly Wrap
12 May 2026 - 15 May 2026

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  • 12 May 2026

    Global markets showed mixed performance tracking disruption in the peace deal between the US and Iran and AI-related developments. On the macro front, US existing home sales rose by 0.2% MoM to 4.02mn. All eyes will be on the CPI release, which is expected to show some pass-through of higher energy costs (Bloomberg est.: +0.6% MoM pickup in Apr’26). In Japan, household spending declined by 2.9% YoY in Mar’26. On the other hand, BoJ minutes showed the possibility of a rate hike in the next policy meeting amidst elevated inflationary risks from the Middle East crisis. PBOC officials also highlighted concerns over inflationary pressure. The US-China summit remains a crucial event, with defence, AI, rare earths and agricultural purchases expected to be the key focus areas. On the domestic front, India's CPI is expected to inch up (BoB est.: 4%) on account of a pick-up in food inflation.

    Global indices ended mixed even as Middle East tensions remained elevated. Equity markets in the US rose as investors awaited the US CPI report. The S&P 500 rose to a record high, led by a rally in semiconductor stocks. In India, the Sensex declined sharply due to deep losses in consumer durables and real estate stocks. It is trading further lower today, while other Asian stocks are trading mixed.

    Table 1 – Stock Markets

    08-05-2026 11-05-2026 Change, %
    Dow Jones49,60949,7040.2
    S & P 5007,3997,4130.2
    FTSE10,23310,2690.4
    Nikkei62,71462,418(0.5)
    Hang Seng26,39426,4070
    Shanghai Comp4,1804,2251.1
    Sensex77,32876,015(1.7)
    Nifty24,17623,816(1.5)

    Source: Bloomberg, Bank of Baroda Research


    Table 2 – Currencies

    08-05-2026 11-05-2026 Change, %
    EUR/USD (1 EUR / USD)1.17871.17830
    GBP/USD (1 GBP / USD)1.36311.3610(0.2)
    USD/JPY (JPY / 1 USD)156.68157.19(0.3)
    USD/INR (INR / 1 USD)94.4895.31(0.9)
    USD/CNY (CNY / 1 USD)6.80056.79550.1
    DXY Index97.9097.960.1

    Source: Bloomberg, Bank of Baroda Research


    Global yields firmed up as fears of elevated energy prices built up anticipation of stickier borrowing costs. The UK's 10Y yield rose the most, followed by the US. The direction of global yields appears to remain elevated this month due to the lack of resolution in the conflict between the US and Iran. India's 10Y yield rose by 5bps amid inflationary concerns. It is trading higher at 7.04% today.

    Table 3 – Bond 10Y Yield

    08-05-2026 11-05-2026 Change, bps
    US4.354.416
    UK4.915.009
    Germany3.013.044
    Japan2.482.524
    China1.761.770
    India6.987.035

    Source: Bloomberg, Bank of Baroda Research



    Table 4 – Short Term Rates

    08-05-2026 11-05-2026 Change, bps
    Tbill-91 days5.275.281
    Tbill-182 days5.505.49(1)
    Tbill-364 days5.655.64(1)
    G-Sec 2Y6.166.227
    India OIS-2M5.345.406
    India OIS-9M5.715.776
    SONIA int rate benchmark3.733.730
    US SOFR3.603.600

    Source: Bloomberg, Bank of Baroda Research


    Table 5 – Liquidity

    Rs tn 08-05-2026 11-05-2026 Change (Rs tn)
    Net Liquidity (-deficit/+surplus) 2.3 1.9 (0.4)

    Source: RBI, Bank of Baroda Research


    Table 6 – Capital Market Flows

    07-05-2026 08-05-2026 Change (US$ mn/Rs cr)
    FII (US$ mn) (29.6) (102.5) (73.0)
       Debt 27.5 43.7 71.2
       Equity (2.1) (146.2) (144.2)
    Mutual Funds (Rs cr) (924.9) 885.8 1,810.7
       Debt (6,709.7) 519.7 7,229.4
       Equity 5,784.8 366.1 (5,418.7)

    Source: Bloomberg, Bank of Baroda Research | Note: Mutual Fund data as of 6 May and 7 May 2026.


    Oil prices increased further after US rejected Iran’s latest peace proposal.

    Table 7 – Commodities

    08-05-2026 11-05-2026 Change, %
    Brent crude (US$/bbl)101.3104.22.9
    Gold (US$/ Troy Ounce)4,715.34,736.20.4
    Copper (US$/ MT)13,515.413,893.12.8
    Zinc (US$/ MT)3,417.23,471.01.6
    Aluminium (US$/ MT)3,503.03,579.52.2

    Source: Bloomberg, Bank of Baroda Research

  • 13 May 2026

    Global markets eyed major macro releases in the US. CPI inflation in the region rose to 3.8% in Apr’26 from 3.3% in Mar’26. On a sequential basis, CPI increased by 0.6%. Price pressures were evident in gasoline prices, grocery costs and rent. Gas prices have surged by 28% over the past two months due to the impact of the ongoing war. Core CPI also remained sticky at 2.8% in Apr’26 compared with 2.6% in Mar’26. Elevated inflationary risks weighed on equity and currency markets amid concerns over higher borrowing costs. Global bond yields also witnessed a broad-based increase. On the domestic front, India more than doubled the import tariff on gold and silver to 15% from 6% earlier. Customs duty on precious metals has also been revised. This emergency measure aims to contain the trade deficit amid a volatile geopolitical environment and a weakening currency.

    Except for the Dow Jones and Nikkei, global equity indices ended lower amid uncertainty over the future of the US-Iran ceasefire. US indices tracked the sharper-than-expected CPI data. Nikkei gained on the back of a rally in AI-related stocks. Sensex declined for the fourth consecutive session, with real estate and consumer durable stocks leading the losses. Sensex is trading higher today, while other Asian markets are trading mixed.

    Table 1 – Stock Markets

    11-05-2026 12-05-2026 Change, %
    Dow Jones49,70449,7610.1
    S & P 5007,4137,401(0.2)
    FTSE10,26910,2650
    Nikkei62,41862,7430.5
    Hang Seng26,40726,348(0.2)
    Shanghai Comp4,2254,214(0.2)
    Sensex76,01574,559(1.9)
    Nifty23,81623,380(1.8)

    Source: Bloomberg, Bank of Baroda Research


    Global currencies depreciated. The DXY rose on safe-haven demand as Middle East tensions persisted. Despite an improvement in Germany's ZEW economic sentiment index, the euro weakened. INR slipped to another record low. However, it is trading stronger today, while other Asian currencies are trading mixed.

    Table 2 – Currencies

    11-05-2026 12-05-2026 Change, %
    EUR/USD (1 EUR / USD)1.17831.1739(0.4)
    GBP/USD (1 GBP / USD)1.36101.3540(0.5)
    USD/JPY (JPY / 1 USD)157.19157.63(0.3)
    USD/INR (INR / 1 USD)95.3195.63(0.3)
    USD/CNY (CNY / 1 USD)6.79556.79690
    DXY Index97.9698.230.3

    Source: Bloomberg, Bank of Baroda Research


    Global yields firmed up as inflation rose in major economies, particularly the US and Germany. The UK's 10Y yield increased the most, reflecting political developments in the region. The upward pressure on yields is likely to persist until a formal peace agreement is reached. India's 10Y yield edged up marginally, supported by lower-than-expected CPI data. It is trading at 7.03% today.

    Table 3 – Bond 10Y Yield

    11-05-2026 12-05-2026 Change, bps
    US4.414.465
    UK5.005.1010
    Germany3.043.106
    Japan2.522.564
    China1.771.760
    India7.037.051

    Source: Bloomberg, Bank of Baroda Research



    Table 4 – Short Term Rates

    11-05-2026 12-05-2026 Change, bps
    Tbill-91 days5.285.291
    Tbill-182 days5.495.490
    Tbill-364 days5.645.640
    G-Sec 2Y6.226.20(2)
    India OIS-2M5.405.432
    India OIS-9M5.775.858
    SONIA int rate benchmark3.733.730
    US SOFR3.603.600

    Source: Bloomberg, Bank of Baroda Research


    Table 5 – Liquidity

    Rs tn 11-05-2026 12-05-2026 Change (Rs tn)
    Net Liquidity (-deficit/+surplus) 1.9 2.3 0.4

    Source: RBI, Bank of Baroda Research


    Table 6 – Capital Market Flows

    08-05-2026 11-05-2026 Change (US$ mn/Rs cr)
    FII (US$ mn) (102.5) (795.7) (693.2)
       Debt 43.7 25.9 (17.8)
       Equity (146.2) (821.6) (675.4)
    Mutual Funds (Rs cr) 885.8 (188.1) (1,074.0)
       Debt 519.7 (5,931.2) (6,450.9)
       Equity 366.1 5,743.1 5,377.0

    Source: Bloomberg, Bank of Baroda Research | Note: Mutual Fund data as of 7 May and 8 May 2026.


    Oil prices increased further amidst elevated tensions between the US and Iran.

    Table 7 – Commodities

    11-05-2026 12-05-2026 Change, %
    Brent crude (US$/bbl)104.2107.83.4
    Gold (US$/ Troy Ounce)4,736.24,715.1(0.4)
    Copper (US$/ MT)13,893.113,958.90.5
    Zinc (US$/ MT)3,471.03,524.01.5
    Aluminium (US$/ MT)3,579.53,562.0(0.5)

    Source: Bloomberg, Bank of Baroda Research

  • 14 May 2026

    Global equity indices recouped their earlier day losses ahead of the US-China meeting, where the focus will be on trade and investment. Elsewhere, the currency market showed stress in anticipation of higher borrowing costs. On the macro front, US PPI firmed up by 1.4% MoM in Apr'26 compared with 0.7% in Mar'26. Core PPI (excluding food and energy) also increased by 1.0%, far higher than the 0.2% increase seen in Mar'26. Thus, price pressure from war-related disruption is already visible. Final demand PPI on a YoY basis is at its highest level since Dec'22. In Germany as well, the wholesale price index rose by 2.0% MoM and by 6.3% YoY in Apr'26. On the domestic front, the new MSP for kharif crops for 2026-27 has been announced, with a 3% hike in paddy prices (Rs 2,441/quintal) from last year. The highest increase in terms of quantum has been noted for sunflower (up 8.1%), followed by cotton.

    Except the Dow Jones, other global indices ended higher. The S&P 500 rose further, driven by a surge in AI-related stocks. Investors also awaited the outcome of the US-China talks. Nikkei rose by 0.8%, with strong gains in banking and real estate stocks. Sensex snapped its losing streak and ended marginally higher, led by gains in metal stocks. It is trading further higher today, in line with its Asian peers.

    Table 1 – Stock Markets

    12-05-2026 13-05-2026 Change, %
    Dow Jones49,76149,693(0.1)
    S & P 5007,4017,4440.6
    FTSE10,26510,3250.6
    Nikkei62,74363,2720.8
    Hang Seng26,34826,3880.2
    Shanghai Comp4,2144,2430.7
    Sensex74,55974,6090.1
    Nifty23,38023,4130.1

    Source: Bloomberg, Bank of Baroda Research


    Except CNY, other global currencies declined. DXY rose by 0.2%, supported by hawkish comments from a key Fed official. EUR depreciated by 0.2% as GDP growth moderated in Q1 2026. INR depreciated further, tracking weak global cues. It is trading further weaker today, in line with other Asian currencies.

    Table 2 – Currencies

    12-05-2026 13-05-2026 Change, %
    EUR/USD (1 EUR / USD)1.17391.1711(0.2)
    GBP/USD (1 GBP / USD)1.35401.3523(0.1)
    USD/JPY (JPY / 1 USD)157.63157.86(0.1)
    USD/INR (INR / 1 USD)95.6395.71(0.1)
    USD/CNY (CNY / 1 USD)6.79696.79060.1
    DXY Index98.3098.520.2

    Source: Bloomberg, Bank of Baroda Research


    Global yields closed mixed. The UK's 10Y yield showed some correction amid uncertainty about the fiscal path. Germany's 10Y yield remained stable following Q1 Euro Area GDP data. The US 10Y yield inched up slightly after the PPI data release. India's 10Y yield also closed stable and is trading at the same level today, with investors awaiting the WPI data release for cues on the pass-through to producer prices.

    Table 3 – Bond 10Y Yield

    12-05-2026 13-05-2026 Change, bps
    US4.464.471
    UK5.105.07(4)
    Germany3.103.100
    Japan2.562.593
    China1.761.75(1)
    India7.057.050

    Source: Bloomberg, Bank of Baroda Research


    Table 4 – Short Term Rates

    12-05-2026 13-05-2026 Change, bps
    Tbill-91 days5.295.323
    Tbill-182 days5.495.545
    Tbill-364 days5.645.7410
    G-Sec 2Y6.206.16(4)
    India OIS-2M5.435.453
    India OIS-9M5.855.883
    SONIA int rate benchmark3.733.730
    US SOFR3.603.60-

    Source: Bloomberg, Bank of Baroda Research


    Table 5 – Liquidity

    Rs tn 12-05-2026 13-05-2026 Change (Rs tn)
    Net Liquidity (-deficit/+surplus) 2.3 2.2 (0.1)

    Source: RBI, Bank of Baroda Research


    Table 6 – Capital Market Flows

    11-05-2026 12-05-2026 Change (US$ mn/Rs cr)
    FII (US$ mn) (795.7) (49.1) 746.6
       Debt 25.9 35.3 9.4
       Equity (821.6) (84.4) 737.2
    Mutual Funds (Rs cr) (188.1) (1,407.7) (1,219.6)
       Debt (5,931.2) (5,808.9) 122.3
       Equity 5,743.1 4,401.1 (1,341.9)

    Source: Bloomberg, Bank of Baroda Research | Note: Mutual Fund data as of 8 May and 11 May 2026.


    Oil prices declined as investors turned their focus on US-China meeting.

    Table 7 – Commodities

    12-05-2026 13-05-2026 Change, %
    Brent crude (US$/bbl)107.8105.6(2.0)
    Gold (US$/ Troy Ounce)4,715.14,688.8(0.6)
    Copper (US$/ MT)13,958.914,109.51.1
    Zinc (US$/MT)3,524.03,509.4(0.4)
    Aluminium (US$/MT)3,562.03,652.52.5

    Source: Bloomberg, Bank of Baroda Research

  • 15 May 2026

    Global markets monitored political developments in the UK and cues from the US-China meeting. On the macro front, US data showed the impact of the war-related crisis. Retail sales rose at a softer pace of 0.5% MoM in Apr'26, compared with 1.6% in Mar'26. Retail sales excluding autos also increased at a moderate pace of 0.7% versus 1.9% earlier. Import prices stiffened by 1.9% MoM in Apr'26 compared with 0.9% in Mar'26. Jobless claims for the week ended 9 May 2026 rose to 211K from 199K in the previous week. In the UK, preliminary Q1 GDP grew by 0.6%, supported by buoyant private consumption. In Japan, PPI rose at a faster pace of 2.3% MoM. On the domestic front, petrol and diesel prices have been increased by Rs 3 per litre with immediate effect. This poses an upside risk to the fuel component of both WPI and CPI in the coming days.

    Except Japan and China, markets elsewhere ended higher. A technology-led rally pushed US stocks higher. On the other hand, Nikkei declined after a key BoJ member advocated an early rate hike. Sensex rose by 1.1% as metal and power stocks surged. It is trading further higher today, while other Asian markets are trading mixed.

    Table 1 – Stock Markets

    13-05-2026 14-05-2026 Change, %
    Dow Jones49,69350,0630.7
    S & P 5007,4447,5010.8
    FTSE10,32510,3730.5
    Nikkei63,27262,654(1.0)
    Hang Seng26,38826,3890
    Shanghai Comp4,2434,178(1.5)
    Sensex74,60975,3991.1
    Nifty23,41323,6901.2

    Source: Bloomberg, Bank of Baroda Research


    Except CNY, other global currencies depreciated. DXY rose following major macroeconomic data releases. GBP declined the most even as GDP growth surpassed estimates. INR touched another record low and is trading further weaker today, inching closer to the 96/$ mark. Other Asian currencies are also trading lower.

    Table 2 – Currencies

    13-05-2026 14-05-2026 Change, %
    EUR/USD (1 EUR / USD)1.17111.1669(0.4)
    GBP/USD (1 GBP / USD)1.35231.3403(0.9)
    USD/JPY (JPY / 1 USD)157.86158.37(0.3)
    USD/INR (INR / 1 USD)95.7195.77(0.1)
    USD/CNY (CNY / 1 USD)6.79066.78720.1
    DXY Index98.5298.820.3

    Source: Bloomberg, Bank of Baroda Research


    Global yields closed mixed. The UK's 10Y yield softened despite stronger-than-expected GDP growth. Germany's 10Y yield edged lower even as an ECB official hinted at a possible rate hike in the next policy meeting. Japan's 10Y yield moved higher ahead of PPI data, which showed persistent price pressures. India's 10Y yield fell by 3bps and is trading higher at 7.05% today, tracking the recent increase in petrol and diesel prices.

    Table 3 – Bond 10Y Yield

    13-05-2026 14-05-2026 Change, bps
    US4.474.481
    UK5.074.99(7)
    Germany3.103.04(6)
    Japan2.592.634
    China1.751.750
    India7.057.02(3)

    Source: Bloomberg, Bank of Baroda Research


    Table 4 – Short Term Rates

    13-05-2026 14-05-2026 Change, bps
    Tbill-91 days5.325.375
    Tbill-182 days5.545.562
    Tbill-364 days5.745.762
    G-Sec 2Y6.166.248
    India OIS-2M5.455.44(1)
    India OIS-9M5.885.891
    SONIA int rate benchmark3.733.730
    US SOFR3.603.59(1)

    Source: Bloomberg, Bank of Baroda Research


    Table 5 – Liquidity

    Rs tn 13-05-2026 14-05-2026 Change (Rs tn)
    Net Liquidity (-deficit/+surplus) 2.2 2.2 0

    Source: RBI, Bank of Baroda Research


    Table 6 – Capital Market Flows

    12-05-2026 13-05-2026 Change (US$ mn/Rs cr)
    FII (US$ mn) (49.1) (380.6) (331.5)
       Debt 35.3 29.1 (6.2)
       Equity (84.4) (409.7) (325.3)
    Mutual Funds (Rs cr) (188.1) (1,407.7) (1,219.6)
       Debt (5,931.2) (5,808.9) 122.3
       Equity 5,743.1 4,401.1 (1,341.9)

    Source: Bloomberg, Bank of Baroda Research | Note: Mutual Fund data as of 8 May and 11 May 2026.


    Oil prices were broadly steady monitoring US-China meeting.

    Table 7 – Commodities

    13-05-2026 14-05-2026 Change, %
    Brent crude (US$/bbl)105.6105.70.1
    Gold (US$/ Troy Ounce)4,688.84,652.0(0.8)
    Copper (US$/ MT)14,109.513,894.7(1.5)
    Zinc (US$/ MT)3,509.43,566.21.6
    Aluminium (US$/ MT)3,652.53,657.50.1

    Source: Bloomberg, Bank of Baroda Research

Economics Scenario

@2026 Bank of Baroda. All rights reserved

Important disclosures are provided at the end of this report.

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