Economic Weekly Wrap
15 April 2025 - 17 April 2025

Global markets went in for some consolidation being hopeful of negotiations on tariff front. This came after some reports hinted at reprieving certain duties on auto sector by the US. However, separate reports also said that the US Commerce department has been initiating trade related probes on pharma and semi-conductor sectors. This may signal further tariff related developments. On macro front, NY Fed inflation expectation index firmed up. In UK, shop price index signalled recovery in retail sales. In China, exports growth picked up to a sharp double-digit pace of 12.4% (est.: 4.6%), on account of frontloading of shipments surrounding the tariff turmoil. On monetary policy front, ECB official hinted at cautious data dependent approach. BoJ official also spoke of staying put amidst financial market volatility. On domestic front, inflation data will be the key watchable where some respite is expected.

Global markets ended higher as US administration announced exemptions on tariffs on certain electronic products, supporting a rally in tech stocks. US President also hinted at a softer stance on auto tariffs. Stocks in Hong Kong rose the most. FTSE also posted robust gains as UK’s retail sales rose more than expected. Sensex is trading higher today, in line with other Asian indices.

Fig 1 – Stock markets

Fig 1 – Stock markets

Source: Bloomberg, Bank of Baroda Research

Note: Indian markets were closed on 14 Apr 2025

DXY languished near a 3-year low as investors monitored developments related to US tariff policies. CNY was also weaker. GBP strengthened buoyed by positive retail sales data. JPY rose to its highest since Sep’24 on safe-haven demand. INR is trading stronger today, in line with other Asian currencies.

Fig 2 – Currencies

Source: Bloomberg, Bank of Baroda Research

Note: Brackets indicate depreciation against the dollar, Indian markets were closed on 14 Apr 2025

US 10Y yield fell at the sharpest pace weighed down by risk off sentiments. Recent macro data points (consumer credit, ISM data and core capital goods orders of the region) still suggest underlying weakness. Even Fed official hinted at rate cut. In India, 10Y yield is likely to have a softening bias this week, as well, supported by favourable inflation print. It is trading at 6.41% today.

Fig 3 – Bond 10Y yield

Source: Bloomberg, Bank of Baroda Research

Note: Indian markets were closed on 14 Apr 2025

Fig 4 – Short term rates

Source: Bloomberg, Bank of Baroda Research

Fig 5 – Liquidity

Source: RBI, Bank of Baroda Research

*Includes LTRO

Fig 6 – Capital market flows

Source: Bloomberg, Bank of Baroda Research

Note: Mutual funds data as of 7 and 8 Apr 2025

Oil prices rose on expectations of a softer tariff stance by the US on auto sector.

Fig 7 – Commodities

Source: Bloomberg, Bank of Baroda Research

In a major development on protectionism front, US has restricted a major technology company from selling a particular chip to China. This again raised anticipation that trade war is going beyond import taxes. Gold continued its record rally amidst safehaven demand. On macro front, Germany’s ZEW expectation index went into negative territory as trade related worries dominated sentiments. In UK, average weekly earnings softened, and unemployment rate remained unchanged. In China, slew of macro data remained upbeat. GDP grew by 5.4% (est.: 5.2%) in Q1CY25 supported by advance shipments ahead of tariff restrictions. Industrial production noted sharpest growth since Jun’21 at 7.7% in Mar’25, on YoY basis. Retail sales also recorded its best print since Dec’23, noting growth of 5.9%. On domestic front, IMD’s forecast of above normal monsoon bodes well for inflation outlook.

Except US, other global indices ended higher despite continued uncertainty over US tariffs and worsening trade relations between US and China. FTSE rose by 1.4% as UK’s unemployment rate remained steady. In Asia, Indian markets led the increase with Sensex rising by 2.1%. Real estate stocks rose the most. It is trading marginally higher today, while other Asian stocks are trading lower.

Fig 1 – Stock markets

Source: Bloomberg, Bank of Baroda Research

Note: Indian markets were closed on 14 Apr 2025

Global currencies ended mixed. DXY recovered and rose by 0.6% as investors monitored developments on US tariffs. EUR fell by 0.6% tracking a sharp drop in Germany’s economic sentiment index. INR rose amidst a sustained decline in oil prices. It is trading further stronger today, in line with other Asian currencies.

Fig 2 – Currencies

Source: Bloomberg, Bank of Baroda Research

Note: Brackets indicate depreciation against the dollar, Indian markets were closed on 14 Apr 2025

US 10Y yield continued to fall as demand for sovereign asset class prevailed balancing risk off sentiments. Elsewhere in Germany, yield underwent some correction albeit softening ZEW data print. In Japan, pared down expectations of rate hike has impacted its yield movement. In India, 10Y yield got comfort from a favourable inflation print. It is trading at 6.42% today.

Fig 3 – Bond 10Y yield

Source: Bloomberg, Bank of Baroda Research

Note: Indian markets were closed on 14 Apr 2025

Fig 4 – Short term rates

Source: Bloomberg, Bank of Baroda Research

Fig 5 – Liquidity

Source: RBI, Bank of Baroda Research

*Includes LTRO

Fig 6 – Capital market flows

Source: Bloomberg, Bank of Baroda Research

Note: Mutual funds data as of 8 and 9 Apr 2025

Oil prices declined as IEA cut its demand forecast for 2025.

Fig 7 – Commodities

Source: Bloomberg, Bank of Baroda Research

Global market is eyeing US-Japan tariff talks, anticipating some forthcoming negotiations. This holds crucial as it paves a way for further negotiations with other major trading partner of the US. Separately, Fed Chair raised flags of unemployment and inflation deflecting from Fed’s goals in the near term on account of ongoing tariff turmoil. This again led to some repricing of risks. Hence, Gold continued its record rally, US treasuries (10Y yield) continued to decline. Other central banks such as Bank of Korea and Bank of Canada held policy rates unchanged, being watchful of how trade policy takes shape. On macro front, US retail sales data remained in line, while industrial production softened. In UK, inflation softened while core held ground. In Japan, exports moderated at a sharp pace. On domestic front, merchandise trade deficit expanded led by pickup in gold imports.

Global indices ended mixed. US indices ended in red as investors monitored comments by US Fed Chair on risks to growth and higher prices due to tariffs. Technology stocks declined the most. The CBOE volatility index used as 'fear gauge' inched up. Sensex closed higher with gains in banking stocks. However, it is trading lower today while other Asian stocks are trading higher.

Fig 1 – Stock markets

Source: Bloomberg, Bank of Baroda Research

Global currencies ended higher. DXY slid as investors remained wary of slowing growth in the US. Yen surged to a multi month high amidst tariff uncertainty and greater demand for safe-haven assets. INR strengthened supported by FII inflow. It is trading further stronger today, in line with other Asian currencies.

Fig 2 – Currencies

Source: Bloomberg, Bank of Baroda Research

Note: Brackets indicate depreciation against the dollar

Fig 3 – Bond 10Y yield

Source: Bloomberg, Bank of Baroda Research

Fig 4 – Short term rates

Source: Bloomberg, Bank of Baroda Research

Fig 5 – Liquidity

Source: RBI, Bank of Baroda Research

*Includes LTRO

Fig 6 – Capital market flows

Source: Bloomberg, Bank of Baroda Research

Note: Mutual funds data as of 9 and 11 Apr 2025

Oil prices inched up on hopes of a possible truce on tariffs war.

Fig 7 – Commodities

Source: Bloomberg, Bank of Baroda Research