US Fed Officials Warns of Rising Inflation from Tariffs

Global Sentiment: Risk-on
Factors: Softer US PPI, Trump-Powell Tension

TODAY’S WATCHLIST
 - Earnings: Axis Bank, Wipro
 - US Initial Jobless Claims Data

THE BIG STORY
Federal Reserve Bank of New York President John Williams said monetary policy remains well-positioned to monitor the economy and assess growing risks, especially from import tariffs. “Maintaining this modestly restrictive stance is entirely appropriate,” he noted, warning that while current inflation effects from tariffs are modest, they’re likely to intensify in the coming months. He expects tariffs to add about 1 percentage point to inflation through early next year. Atlanta Fed President Raphael Bostic echoed that concern, calling the latest price data “a source of concern” and pointing to the sharpest increase seen all year, particularly in imported goods. Though not a voting member this year, Bostic suggested only a single quarter-point cut might be needed, citing uncertainty about inflation’s trajectory.

DATA
US producer prices were flat in June, defying expectations of a 0.2% rise, as higher tariff-driven costs for goods like communication equipment were offset by weaker demand for travel-related services. The Producer Price Index for final demand showed no change last month, following an upwardly revised 0.3% increase in May, according to the Labour Department. 
Meanwhile, US crude oil inventories surged by 19.1 million barrels in the week ending 11 July, following a 7.1 million-barrel build the previous week. This marked the third consecutive weekly increase and pushed stockpiles to a record high, sharply contrasting with market forecasts of a 2-million-barrel draw. 

WHAT HAPPENED OVERNIGHT 
US stocks indices closed modestly higher on Wednesday, with the Nasdaq Composite securing another record finish despite a turbulent session marked by speculation over the future of Federal Reserve Chair Jerome Powell. Equities briefly wobbled after reports suggested President Trump was preparing to dismiss Powell, but markets recovered after the president publicly denied the claims. 

US Treasury yields slipped on Wednesday after softer-than-expected producer price data reinforced expectations for Fed rate cuts later this year. The yield on the benchmark 10-year note fell 3.6 basis points to 4.453%, retreating from an earlier five-week high of 4.5%. The 2-year yield, closely tied to Fed rate expectations, dropped 6.7 basis points to 3.892%. June's producer prices came in flat for both the headline and core readings, missing forecasts for a 0.2% rise.

The US dollar fell on Wednesday following reports that President Trump was considering firing Fed Chair Jerome Powell, though losses were pared after the president publicly denied the claims. The dollar index slipped 0.3% to 98.29, while the euro rose 0.34% to $1.1639. Against the Japanese yen, the greenback weakened 0.71% to 147.81, as markets grappled with the potential political fallout of renewed pressure on the Fed’s independence.

Brent crude oil prices edged slightly lower on Wednesday as a surprise build in US fuel inventories and ongoing concerns over the broader economic fallout from President Trump's trade tariffs offset signs of rising demand. Brent crude futures dipped 0.3% to settle at $68.52 a barrel, while West Texas Intermediate crude eased 0.2% to close at $66.38. 

Day’s Ledger
Economic Data:

• Australia July Consumer Inflation Expectations 
• Euro June Core Inflation Rate 
• Euro June CPI 
• EIA Weekly Storage Report
• Japan June Balance of Trade 
• US June Retail Sales 
• US Initial Jobless Claims 
• UK May Unemployment Rate 

Corporate Action:

• Apr-Jun earnings: 360 ONE WAM, ABM Knowledgeware, Alok Industries, Axis Bank, CEAT, Clean Science, HDFC AMC, Heritage Foods, Ind Bank Housing, Integra Engineering India, Jio Financial Services, Jupiter Infomedia, Krishana Phoschem, LTIMindtree, Mishka Exim, Morarka Finance, MSR India, National Standard India, Navkar Corp, Newgen Software, Nikki Global Finance, Nuvoco Vistas, Polycab India, Pratiksha Chemicals, Route Mobile, Shoppers Stop, Shree Rajiv lochan, Sterling and Wilson, Sungarner Energies, Sungold Capital, Sunteck Realty, Tata Communications, Indian Hotels, South Indian Bank, Vimta Labs, Waaree Renewable, Wipro.
• HUDCO to consider fund raising 
• Inox Wind to consider fund raising 
• Mahindra Logistics to consider right issue 
• Patanjali Foods to consider bonus share 

Policy Events

• Fed Williams Speech
• Fed Kugler Speech
• Fed Cook Speech

TICKERS

• ADITYA BIRLA REAL ESTATE board to consider fundraising on Jul. 23 via loans or debt securities; funds aimed at refinancing debt linked to Century Pulp & Paper, ahead of proposed sale to ITC.
• CABINET clears ₹200-bln investment limit for NTPC and ₹70-bln investment by NLC India into their respective renewables arms to boost green energy goals.
• EMCURE PHARMA to distribute Sanofi’s oral anti-diabetic brands including Amaryl and Cetapin across India under exclusive deal; Sanofi retains ownership and manufacturing.
• GODAWARI POWER gets environmental clearance for setting up 2-mln-tonne integrated steel plant in Raipur, Chhattisgarh.
• GODREJ PROPERTIES acquires 50-acre land parcel in Raipur for premium plotted housing; estimated saleable area ~950,000 sq ft.
• HINDUSTAN ZINC receives LoI for potash, halite block in Hanumangarh, Rajasthan; 1,841.3-hectare block granted under Mineral Auction Rules.
• LT FOODS’ Nature Bio Foods enters Europe’s B2C organic market with new ₹200-million facility in Rotterdam; plans ₹150-million more investment in 3 years.
• LUPIN launches generic Lotemax eye drops in the US; estimated annual sales of reference drug stand at $55 million.
• NLC INDIA gets Cabinet nod to invest ₹70 billion into renewables arm without prior clearance; aims to develop 10.11 GW green capacity by 2030.
• NTPC gets Cabinet approval to invest ₹200 billion in green subsidiaries to fast-track 60 GW renewable target; NTPC Green Energy currently holds 32 GW portfolio.
• PNC INFRATECH secures 300 MW solar + 150 MW/600 MWh storage project under NHPC’s 1,200 MW bid; quoted tariff ₹3.13/kWh.
• SANOFI INDIA partners Emcure for nationwide distribution of its oral diabetes portfolio; no staff transfers involved.
• SBI opens ₹250-billion QIP; floor price ₹811.05/share with up to 5% discount option; first equity QIP since FY18.
• TECH MAHINDRA June quarter revenue dips 1.4% QoQ in constant currency terms to ₹133.51 billion; net profit ₹11.41 billion; margin up 50 bps QoQ to 11.1%; deal wins at $809 million.
• UK PAINTS (INDIA) ups stake in Berger Paints to nearly 65% by acquiring 168.79 million shares on Monday, representing 14% of voting capital.
• ZYDUS LIFESCIENCES gets USFDA nod for Matoda unit post remote review of Atorvastatin supplement; also approved to sell Celecoxib capsules in US market.

MUST READ

• Govt launches 6-year scheme to boost farming in 100 lagging districts
• SEBI nears finalisation of penalty rationalisation framework for brokers
• Bank NIMs may shrink by 30 bps in FY26 on loan repricing: Fitch Ratings
• SEBI proposes linking gold, silver ETFs to spot prices on domestic exchange
• India's Russian oil imports up slightly in January-June, shows data
• Indonesia says US tariff ‘Huge Win’ for labor-heavy sectors
• Fed’s Barr warns of booms and busts tied to weakened bank rules
• US producer prices unchanged with wholesale inflation remaining under control
• We have another deal coming up 'maybe' with India, says Trump