The Morning Edge: SC Shields Fed Independence, Easing Fears of Political Ouster for Powell

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Global Sentiment: Risk-on
Factors:  US Tax Bill 

TODAY’S WATCHLIST
 - RBI Board Meeting  
-  JSW Steel Earnings

THE BIG STORY
The US Supreme Court delivered a pivotal decision Thursday that helps safeguard Federal Reserve Chair Jerome Powell from political removal, easing market concerns about presidential interference. While the ruling allowed President Trump to maintain his dismissal of two labour board members, justices explicitly distinguished the Fed as a "uniquely structured" institution protected by its "for cause" removal standard. This critical distinction comes as Trump continues publicly criticizing Powell over interest rate policy; despite recently claiming he wouldn't attempt to fire the Fed chair. 

The ruling temporarily stabilizes a fraught relationship between the White House and the Fed, which has faced unprecedented political pressure under Trump’s attacks on Powell’s stewardship. Though the president has walked back threats of firing Powell, his sustained criticism particularly over the Fed’s refusal to cut rate has kept markets on edge, wary of any erosion in central bank autonomy. The Court’s acknowledgment of the Fed’s unique legal insulation offers reassurance, but the broader battle over presidential authority over independent agencies remains unresolved, leaving a lingering question: How far can Trump push before institutional safeguards buckle?

DATA
Japan's core inflation rose 3.5% in April, its fastest pace in over two years, beating forecasts and up from 3.2% in March. The data strengthens expectations of a rate hike by year-end, as the Bank of Japan navigates persistent food inflation and economic pressure from Trump's tariffs.

Meanwhile in the US, jobless claims fell by 2,000 to 227,000 last week, signalling continued labour market strength. However, unemployment rolls are rising, as economic uncertainty from President Trump's shifting policies makes employers cautious about hiring. The stable job market gives the Fed leeway to hold rates steady for now.

WHAT HAPPENED OVERNIGHT
US stocks ended a volatile session mostly flat on Thursday, recovering from earlier losses as Treasury yields pulled back following the House’s passage of President Donald Trump's tax and spending bill. Mega cap growth names like Nvidia, Amazon, and Tesla posted gains, while Alphabet rose 1.3% to a nearly three-month high. Apple slipped 0.36%. 

US Treasury yields pulled back on Thursday after surging earlier in the session, with the 30-year bond touching a 19-month high amid ongoing concerns over the country’s fiscal outlook and waning demand for government debt. The recent selloff had pushed bond prices lower, prompting some buying interest. By the close, the 30-year yield eased 3.7 basis points to 5.0521%, while the benchmark 10-year yield slipped to 4.551%, down from an intraday peak of 4.629%, it’s highest since 12 February.

The US dollar advanced on Thursday after three straight sessions of losses, buoyed by the House of Representatives passing President Donald Trump's sweeping tax and spending bill. The move came as the euro weakened following dismal euro zone economic data. The non-partisan Congressional Budget Office projects the bill will add $3.8 trillion to the existing $36.2 trillion US debt over the next decade. The euro slipped 0.41% to $1.1283, while the dollar strengthened 0.29% against the Japanese yen to 144.08.

Brent crude oil prices declined on Thursday as investors reacted to reports that OPEC+ is considering a production increase for July, raising fears that supply could outstrip demand growth. Brent crude futures fell 47 cents, or 0.72%, to settle at $64.44 a barrel, while US West Texas Intermediate crude dropped 37 cents, or 0.6%, to $61.20.

• Day’s Ledger
  
• Economic Data:
• Germany Jan-Mar GDP data
• India weekly forex reserve data
• US April new home sales data
• Corporate Events:
• Jan-Mar earnings: Afcons Infrastructure, AIA Engineering, Ashok Leyland, Balkrishna Industries, BEML, Devyani International, GE Vernova TD India, Glenmark Pharma, JSW Steel, Linde India, Narayana Hrudayalaya, Timken India.
• Ashok Leyland to consider bonus share issue
• RACL Geartech to consider allotment of equity shares
• Taylormade Renewables to consider issue of warrants
• Yuken India to consider raising of fund
• Policy
• RBI Board meeting
• ECB's Lane speaks
• ECB's Schnabel speaks
• TICKERS.
• CONCOR Jan-Mar PAT up 3% on year but misses Street view
• Grasim net loss below Street view, revenue rises strongly
• IndusInd Bank promoter pledges capital support amid accounting woes, quarterly loss
• ITC profit jumps nearly 4x in March quarter on hotel demerger gains
• Ramco Cements Jan-Mar PAT slumps 74.5% YoY as sales fall 10.5%
• Ola Electric board approves fundraise of up to ₹17 billion via debt instruments
• Tata Motors rolls out new Altroz, prices start at ₹689,000 
• Tata Steel's Kalinganagar plant triples capacity to 8 mtpa after phase-II expansion
• TVS Motor to supply 500 electric three-wheelers to OOR Cabs in 2025-26

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