Economic Weekly Wrap
03 April2023 - 06 April 2023

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  • 03 April 2023

    Fed’s gauge of inflation data (PCE: down to 5% in Feb’23 against 5.3% in Jan’23) surprised positively. However, despite this cool off, FedWatch pointed the probability of 25bps hike now stands at 61% against 48% previously. Fed Board Governor is scheduled to speak today and might offer more information on the same. Surprise output cuts announced by OPEC+ members sent the markets in to tizzy with growing unrest over possibility of hotter global inflation. Elsewhere, Japan’s PMI contracted at a much slower pace at 49.2 in Mar’23 (47.7 in Feb’23). In the ongoing week, investors will monitor the release of US payroll and US ISM data. On the domestic front, RBI’s rate decision is keenly awaited.


    Global indices ended in green. Fed’s preferred indicator for inflation started showing early signs of cooling with PCE (personal consumption expenditure index) moderating to 5% (vs 5.3% in Jan’23) and Core PCE easing down to 4.6% (vs 4.7% in Jan’23), as result pushing US indices higher. Technology and consumer good stocks gained the most. Tracking global cues, Sensex too ended in green climbing up by 1.8% led by IT and banking stocks. Sensex is trading higher today, in line with other Asian indices.

    Fig 1 – Stock markets

      30-03-2023 31-03-2023 % change
    Dow Jones 32,859 33,274 1.3
    S & P 500 4,051 4,109 1.4
    FTSE 7,620 7,632 0.1
    Nikkei 27,783 28,041 0.9
    Hang Seng 20,309 20,400 0.4
    Shanghai Comp 3,261 3,273 0.4
    Sensex 57,960 58,992 1.8
    Nifty 17,081 17,360 1.6

    Source: Bloomberg, Bank of Baroda Research


    Barring INR and CNY, other global currencies fell against the dollar. DXY rose by 0.1%. PCE inflation showed prices have moderated, while on the other hand, jobless claims rose. In Europe, stubbornly high core inflation has raised concerns that ECB will have to hike rates more than the Fed this year. INR rose by 0.2%. However, it is trading lower today, in line with other Asian currencies.

    Fig 2 – Currencies

      30-03-2023 31-03-2023 % change
    EUR/USD (1 EUR / USD) 1.0905 1.0839 (0.6)
    GBP/USD (1 GBP / USD) 1.2386 1.2337 (0.4)
    USD/JPY (JPY / 1 USD) 132.70 132.86 (0.1)
    USD/INR (INR / 1 USD) 82.34 82.18 0.2
    USD/CNY (CNY / 1 USD) 6.8706 6.8736 0

    Source: Bloomberg, Bank of Baroda Research


    Except Japan and India (higher), other global yields closed lower. Yields in US and Germany (-8bps each) fell the most. Softer than anticipated inflation print in the US for Mar’23 has raised hopes that Fed might not take an aggressive stance on rates. India’s 10Y yield rose by 3bps (7.31%), ahead of RBI’s monetary policy decision. It is trading further higher today at 7.33%.

    Fig 3 – Bond 10Y yield

      30-03-2023 31-03-2023 change in bps
    US 3.55 3.47 (8)
    UK 3.52 3.49 (3)
    Germany 2.37 2.29 (8)
    Japan 0.33 0.35 2
    China 2.87 2.86 (1)
    India 7.29 7.31 3

    Source: Bloomberg, Bank of Baroda Research


    Fig 4 – Short term rates

      30-03-2023 31-03-2023 change in bps
    Tbill-91 days 7.00 6.88 (12)
    Tbill-182 days 7.26 7.10 (16)
    Tbill-364 days 7.29 7.16 (13)
    G-Sec 2Y 7.17 7.05 (13)
    SONIA int rate benchmark 4.18 4.18 0
    US SOFR 4.83 4.82 (1)

    Source: Bloomberg, Bank of Baroda Research


    Fig 5 – Liquidity

    Rs tn 29-03-2023 31-03-2023 change (Rs tn)
    Net Liquidity (-Surplus/+deficit) (0.4) (1.0) (0.6)
    Reverse repo 0 0 0
    Repo 0 0 0

    Source: RBI, Bank of Baroda Research


    Fig 6 – Capital market flows

      28-03-2023 29-03-2023 change (US$ mn/Rs cr)
    FII (US$ mn) 308.7 (372.6) (681.3)
    Debt 71.9 (474.0) (545.8)
    Equity 236.8 101.4 (135.4)
    Mutual funds (Rs cr) 1,621.4 1,461.5 (159.9)
    Debt (376.1) (254.9) 121.2
    Equity 1,997.5 1,716.4 (281.1)

    Source: Bloomberg, Bank of Baroda Research │Note: Mutual funds data as of 23 Mar 2023 and 24 Mar 2023


    Crude oil prices continued the upward momentum and rose by 0.6% led by OPEC+ announcing a surprise cut in output.

    Fig 7 – Commodities

      30-03-2023 31-03-2023 % change
    Brent crude (US$/bbl) 79.3 79.8 0.6
    Gold (US$/ Troy Ounce) 1,980.4 1,969.3 (0.6)
    Copper (US$/ MT) 9,003.3 9,003.5 0
    Zinc (US$/MT) 2,963.5 2,947.3 (0.5)
    Aluminium (US$/MT) 2,386.0 2,413.0 1.1

    Source: Bloomberg, Bank of Baroda Research

  • 05 April 2023

    Sluggish US data (shrinking manufacturing activity and lower jobs opening) pulled down the dollar index and raised hope of Fed nearing the end of rate tightening cycle. Some of the Global Central Banks have already started to hit the pause button with Reserve Bank of Australia keeping rates unchanged at 3.6%. However, the same cannot be said about New Zealand which hiked rate by 50bps to 5.25%. In India, manufacturing PMI expanded to 3-month high to 56.4 in Mar’23 from 55.3 in Feb’23 boosted by uptick in new orders and output amidst easing of input cost pressure. Separately, World Bank has trimmed India’s growth down to 6.3% for FY24 (6.6% earlier) on the back of slower consumption growth and challenging external conditions. Markets await RBI’s rate decision and a possible shift in stance in the upcoming meet.


    Global indices ended mixed. US indices took a beating after JOLTS report signalled the likelihood of US labour market cooling off. FTSE ended lower and was dragged down by oil and gas stocks. On other other hand, Shanghai Comp gained by 0.5% followed by Nikkei (0.4%). Sensex is trading higher today while other Asian indices are trading mixed.

    Fig 1 – Stock markets

      03-04-2023 04-04-2023 % change
    Dow Jones 33,601 33,402 (0.6)
    S & P 500 4,125 4,101 (0.6)
    FTSE 7,673 7,635 (0.5)
    Nikkei 28,188 28,287 0.4
    Hang Seng 20,409 20,275 (0.7)
    Shanghai Comp 3,296 3,313 0.5
    Sensex 58,992 59,106 0.2
    Nifty 17,360 17,398 0.2

    Source: Bloomberg, Bank of Baroda Research


    Most global currencies ended higher against the dollar, with GBP (+0.7%) and JPY (+0.6%) gaining the most. DXY was down by 0.5%, following weaker than expected macro data (factory orders, ISM manufacturing and job openings), fuelling hopes of a pause by US Fed. Following global cues, INR is trading higher today, in line while other Asian currencies.

    Fig 2 – Currencies

      03-04-2023 04-04-2023 % change
    EUR/USD (1 EUR / USD) 1.0899 1.0953 0.5
    GBP/USD (1 GBP / USD) 1.2414 1.2501 0.7
    USD/JPY (JPY / 1 USD) 132.46 131.71 0.6
    USD/INR (INR / 1 USD) 82.18 82.33 (0.2)
    USD/CNY (CNY / 1 USD) 6.8777 6.8793 (0.0)

    Source: Bloomberg, Bank of Baroda Research


    Major global 10Y yields closed mixed. While yields in US (-7bps) and Germany (-1bps) fell, they were stable in the UK (flat) and rose in Japan (+3bps). Weaker than anticipated macro data from the US has increased the likelihood (59% chance) of Fed opting for a pause in the next policy meeting. Today, India’s 10Y yield is trading lower at 7.29% as participants await RBI’s rate decision.

    Fig 3 – Bond 10Y yield

      03-04-2023 04-04-2023 change in bps
    US 3.41 3.34 (7)
    UK 3.43 3.43 0
    Germany 2.26 2.25 (1)
    Japan 0.39 0.43 3
    China 2.86 2.87 0
    India 7.31 7.31 0

    Source: Bloomberg, Bank of Baroda Research


    Fig 4 – Short term rates

      03-04-2023 04-04-2023 change in bps
    Tbill-91 days 6.88 6.93 5
    Tbill-182 days 7.10 7.17 7
    Tbill-364 days 7.16 7.21 5
    G-Sec 2Y 7.05 7.06 1
    SONIA int rate benchmark 4.18 4.18 0
    US SOFR 4.87 4.84 (3)

    Source: Bloomberg, Bank of Baroda Research


    Fig 5 – Liquidity

    Rs tn 31-04-2023 03-04-2023 change (Rs tn)
    Net Liquidity (-Surplus/+deficit) (1.0) (2.1) (1.1)
    Reverse repo 0 0 0
    Repo 0 0 0

    Source: RBI, Bank of Baroda Research


    Fig 6 – Capital market flows

      29-03-2023 31-03-2023 change (US$ mn/Rs cr)
    FII (US$ mn) (372.6) 293.5 666.1
    Debt (474.0) 5.7 479.7
    Equity 101.4 287.8 186.4
    Mutual funds (Rs cr) 1,621.4 1,461.5 (159.9)
    Debt (376.1) (254.9) 121.2
    Equity 1,997.5 1,716.4 (281.1)

    Source: Bloomberg, Bank of Baroda Research │Note: Mutual funds data as of 23 Mar 2023 and 24 Mar 2023


    Global oil prices largely remained unchanged as investors continued to monitor the developments post the announcement of supply cuts by OPEC+ members.

    Fig 7 – Commodities

      03-04-2023 04-04-2023 % change
    Brent crude (US$/bbl) 84.9 84.9 0
    Gold (US$/ Troy Ounce) 1,984.7 2,020.4 1.8
    Copper (US$/ MT) 8,917.0 8,740.3 (2.0)
    Zinc (US$/MT) 2,923.7 2,852.5 (2.4)
    Aluminium (US$/MT) 2,397.5 2,370.5 (1.1)

    Source: Bloomberg, Bank of Baroda Research

  • 06 April 2023

    Disappointing data reading from US (ISM non-manufacturing and ADP employment) continues to signal slowdown in US economy. Thus raising the possibility of Fed nearing a pause (59% chance) to the aggressive tightening cycle. Elsewhere, Australia’s trade balance surprised positively as it expanded to US$ 9.25 bn in Feb’23, with exports declining at a much slower pace. On the back of uptick in new orders, Chinese services activity accelerated for the 4-month in a row to 57.8 in Mar’23 (55 in Feb’23). Separately, India’s services PMI moderated to 57.8 in Mar’23 down from 59.4 (12-year high) in Feb’23. As a result composite PMI eased a tad bit to 58.4 (from 59 in Feb’23). RBI’s rate decision will take the centre stage today.


    Global indices closed mixed as uncertainty over global economic outlook resurfaced. Amidst these concerns, S&P 500 was down by 0.2%. Amongst other indices, Nikkei dropped the most and was dragged down by finance & investment and transport stocks. On the other hand, Sensex rallied and climbed up by 1% led by strong gains in cap goods, IT and consumer durable stocks. It is trading lower today as the attention shifts towards RBI’s rate decision. Other Asian indices are also trading lower.

    Fig 1 – Stock markets

      04-04-2023 05-04-2023 % change
    Dow Jones 33,402 33,483 0.2
    S & P 500 4,101 4,090 (0.2)
    FTSE 7,635 7,663 0.4
    Nikkei 28,287 27,813 (1.7)
    Hang Seng 20,409 20,275 (0.7)
    Shanghai Comp 3,296 3,313 0.5
    Sensex 59,106 59,689 1.0
    Nifty 17,398 17,557 0.9

    Source: Bloomberg, Bank of Baroda Research


    Global currencies closed mixed against the dollar, with JPY and INR ending higher and GBP and EUR closing lower. DXY rose by 0.3%, awaiting US non- farm payroll data due tomorrow. INR appreciated by 0.4%, supported by FPI inflows. It is trading further higher today, while other Asian currencies are trading mixed.

    Fig 2 – Currencies

      04-04-2023 05-04-2023 % change
    EUR/USD (1 EUR / USD) 1.0953 1.0904 (0.4)
    GBP/USD (1 GBP / USD) 1.2501 1.2462 (0.3)
    USD/JPY (JPY / 1 USD) 131.71 131.32 0.3
    USD/INR (INR / 1 USD) 82.33 82.00 0.4
    USD/CNY (CNY / 1 USD) 6.8777 6.8793 0

    Source: Bloomberg, Bank of Baroda Research


    Except Japan (higher) and China (closed), other global 10Y yields closed lower. Yields in Germany, India and the US fell the most. Weaker than expected US ADP employment print and ISM non-manufacturing signalled further slowdown in the economy. It has again raised hopes of a pause by the Fed. India’s 10Y yield was down by 4bps to 7.27%. It is just a tad higher at 7.28% today, ahead of RBI’s rate decision.

    Fig 3 – Bond 10Y yield

      04-04-2023 05-04-2023 change in bps
    US 3.34 3.31 (3)
    UK 3.43 3.43 (1)
    Germany 2.25 2.18 (7)
    Japan 0.43 0.48 6
    China 2.86 2.87 0
    India 7.31 7.27 (4)

    Source: Bloomberg, Bank of Baroda Research


    Fig 4 – Short term rates

      04-04-2023 05-04-2023 change in bps
    Tbill-91 days 6.93 6.90 (3)
    Tbill-182 days 7.17 7.16 (1)
    Tbill-364 days 7.21 7.19 (2)
    G-Sec 2Y 7.06 7.04 (2)
    SONIA int rate benchmark 4.18 4.18 0
    US SOFR 4.84 4.83 (1)

    Source: Bloomberg, Bank of Baroda Research


    Fig 5 – Liquidity

    Rs tn 3-04-2023 5-04-2023 change (Rs tn)
    Net Liquidity (-Surplus/+deficit) (2.1) (2.7) (0.6)
    Reverse repo 0 0 0
    Repo 0 0 0

    Source: RBI, Bank of Baroda Research


    Fig 6 – Capital market flows

      31-03-2023 3-04-2023 change (US$ mn/Rs cr)
    FII (US$ mn) 293.5 (2.3) (295.8)
    Debt 5.7 (70.0) (75.7)
    Equity 287.8 67.8 (220.1)
    Mutual funds (Rs cr) 1,621.4 1,461.5 (159.9)
    Debt (376.1) (254.9) 121.2
    Equity 1,997.5 1,716.4 (281.1)

    Source: Bloomberg, Bank of Baroda Research │Note: Mutual funds data as of 23 Mar 2023 and 24 Mar 2023


    Global oil prices were broadly steady as signs of slowdown in the US and China outweighed the benefit from more than expected dip in US crude inventories.

    Fig 7 – Commodities

      04-04-2023 05-04-2023 % change
    Brent crude (US$/bbl) 84.9 85.0 0.1
    Gold (US$/ Troy Ounce) 2,020.4 2,020.7 0
    Copper (US$/ MT) 8,740.3 8,784.8 0.5
    Zinc (US$/MT) 2,852.5 2,808.0 (1.6)
    Aluminium (US$/MT) 2,370.5 2,333.5 (1.6)

    Source: Bloomberg, Bank of Baroda Research

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    इस लेख/इन्फोग्राफिक/चित्र/वीडियो की सामग्री का उद्देश्य केवल सूचना से है और जरूरी नहीं कि यह बैंक ऑफ बड़ौदा के विचारों को प्रतिबिंबित करे। सामग्री प्रकृति में सामान्य हैं और यह केवल सूचना मात्र है। यह आपकी विशेष परिस्थितियों में विशिष्ट सलाह का विकल्प नहीं होगा । बैंक ऑफ बड़ौदा और/या इसके सहयोगी और इसकी सहायक कंपनियां सटीकता के संबंध में कोई प्रतिनिधित्व नहीं करती हैं; यहां निहित या अन्यथा प्रदान की गई किसी भी जानकारी की पूर्णता या विश्वसनीयता और इसके द्वारा उसी के संबंध में किसी भी दायित्व को अस्वीकार करें। जानकारी अद्यतन, पूर्णता, संशोधन, सत्यापन और संशोधन के अधीन है और यह भौतिक रूप से बदल सकती है। इसकी सूचना किसी भी क्षेत्राधिकार में किसी भी व्यक्ति द्वारा वितरण या उपयोग के लिए अभिप्रेत नहीं है, जहां ऐसा वितरण या उपयोग कानून या विनियमन के विपरीत होगा या बैंक ऑफ बड़ौदा या उसके सहयोगियों को किसी भी लाइसेंसिंग या पंजीकरण आवश्यकताओं के अधीन करेगा । उल्लिखित सामग्री और सूचना के आधार पर किसी भी वित्तीय निर्णय लेने के लिए पाठक द्वारा किए गए किसी भी प्रत्यक्ष/अप्रत्यक्ष नुकसान या देयता के लिए बैंक ऑफ बड़ौदा जिम्मेदार नहीं होगा । कोई भी वित्तीय निर्णय लेने से पहले अपने वित्तीय सलाहकार से सलाह जरूर लें।

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