The Morning Edge: US Fiscal Outlook Darkens As Debt, Deficits Balloon

The Congressional Budget Office delivered a sobering long-term forecast on Thursday, projecting federal deficits will surge to 7.3% of GDP by 2055—nearly double the 30-year average of 3.9%—as rising interest costs and demographic pressures weigh on America’s fiscal health. Even more alarming: public debt is expected to skyrocket to 156% of GDP within three decades, up from 100% in 2025, as an aging population shrinks the workforce and slows economic growth.

While these projections assume no policy changes, they underscore the unsustainable trajectory of US finances. With interest payments consuming a growing share of revenue, the CBO’s report serves as a stark warning about the tough fiscal choices looming on the horizon.

Data
The US economy grew at a stronger pace last quarter than initially estimated, fuelled by pre-emptive big-ticket purchases ahead of import duties, according to the Commerce Department. Corporate profits surged by $204.7 billion (5.4%) to a record $4 trillion, marking the largest jump since mid-2021, with financial firms contributing $69.4 billion and non-financial firms adding $53.1 billion. Meanwhile, jobless claims dipped slightly to 224,000, but hiring remains sluggish, keeping continuing claims elevated at 1.856 million. Economists warn that the Trump administration's sweeping trade policies and deep government spending cuts could further strain labour market stability.

Markets
Overnight
US stocks seesawed on Thursday as markets digested President Trump’s sweeping new 25% tariffs on imported vehicles and auto parts—a dramatic escalation of global trade tensions. While domestic EV makers Tesla and Rivian gained ground thanks to their US-based production, traditional automakers reeled: General Motors plunged 7.36%, Ford dropped 3.88%, and Stellantis fell 1.25% on supply chain fears. The split performance highlights the uneven impact of protectionist policies—boosting some sectors while hammering others. With automakers now in the crosshairs, investors are bracing for ripple effects across manufacturing and consumer prices.

Long-dated US Treasury yields rose sharply on Thursday, reaching their highest levels in nearly a month, as investors grew increasingly concerned that new tariffs could fuel inflationary pressures. The benchmark 10-year yield climbed 2.7 basis points to 4.365%, while the seven-year yield also moved higher following a lacklustre $44 billion auction of seven-year notes. With tariffs threatening to drive up prices across key sectors, investors are reassessing the outlook for interest rates and economic growth—pushing yields upward as they demand higher compensation for holding long-term debt.

The US dollar traded mixed as markets assessed the potential impact of upcoming US tariffs, while the Canadian dollar and Mexican peso weakened following Trump's auto trade levies. The dollar index dipped 0.33% to 104.29, while the euro rose 0.4% to $1.0795, breaking a six-day losing streak after hitting a three-week low of $1.0731 earlier in the session.

Brent crude oil prices inched higher as markets weighed tightening crude supplies against the potential economic impact of new US tariffs. Brent settled at $74.03 per barrel, up 0.3%, while WTI rose 27 cents to $69.92. The modest gains reflect a balancing act in markets—with production cuts and inventory declines supporting prices, while fears that tariffs could dampen demand kept the rally in check. 
Day’s Ledger
Economic Data:

• India Oct-Dec Balance of Payments Data 
• India February Fiscal Data
• India Weekly FX Reserves Data
• US February PCE price index 
• US Baker Hughes Oil Rig Count Data

Corporate Actions:

• Ashiana Housing board to consider dividend
• DCM Shriram Industries board to consider dividend
• Nitin Fire Protection Industries board to consider Earnings
• AION-TECH SOLUTIONS board to discuss fundraising plans
• MBL Infrastructure board to discuss fundraising plans
• Minda Corporation board to discuss fundraising plans
• Lancor Holdings board to discuss fundraising plans
• Simplex Infrastructures board to discuss fundraising plans

Policy:

• ECB's De Guindos Speaks  
• Fed Vice Chair for Supervision Barr Speaks  

Tickers

• ADANI GREEN ENERGY commissioned 396.7 MW power projects in Khavda, Gujarat; total renewable capacity now stands at 13,487.8 MW.
• ADITYA BIRLA FASHION AND RETAIL informed that NCLT approved scheme of arrangement between company and Aditya Birla Lifestyle Brands with respective shareholders and creditors.
• ASIAN PAINTS to invest ₹25.6 billion to set up VAE & VAM facility in Dahej. Approved ₹6.9 billion additional capex for pre-operative costs.
• BHARAT ELECTRONICS secured additional orders worth ₹13.85 billion; total orders for 2024-25 now stand at ₹184.15 billion.
• DCM SHRIRAM commissioned 12 TDP compressed biogas plant at Ajbapur unit with ₹1.31 billion investment.
• FORCE MOTORS signed contract to supply 2,978 vehicles to Indian Defence Forces.
• HINDUSTAN AERONAUTICS revised LCA Mk1 FOC contract value from ₹59.89 billion to ₹65.42 billion due to schedule changes.
• INFOSYS partnered with LKQ Europe to implement unified cloud HR platform across 18 countries for process streamlining.
• JINDAL STEEL & POWER declared successful bidder for Saradhapur Jalatap East coal block with 3,257 million tonnes estimated geological reserves.
• POWER FINANCE CORPORATION transferred Kurnool III PS RE Transmission to Power Grid Corporation as winning bidder for renewable transmission project.
• PUNJAB & SIND BANK raised ₹12.19 billion via QIP on March 27 by allotting 317.7 million shares at ₹38.37 per share to qualified institutional buyers.
• RAYMOND informed that NCLT approved scheme of arrangement between RAYMOND and RAYMOND REALTY and their shareholders.
• SANDHAR TECHNOLOGIES exited joint venture Jinyoung Sandhar Mechatronics by selling entire stake to Korea-based partner to streamline operations.
• SBI LIFE INSURANCE COMPANY received ₹590 million tax penalty demand from Income Tax Department for FY 2019–20.
• UCO BANK raised ₹20 billion through QIP by issuing 583.6 million shares at ₹34.27 per share to institutional buyers.
• ULTRATECH CEMENT commissioned clinker, grinding units in MP, Maharashtra, WB, and a bulk terminal in Lucknow. Total global capacity now at 188.76 mtpa.
• ZAGGLE PREPAID OCEAN SERVICES approved acquisition of 45.33% stake in Effiasoft and considering buying another 5.67%.

Must Read

• India seeks clarity on reciprocal tariffs but US holds back
• SEBI proposes to limit F&O expiry for exchanges to either Tuesday or Thursday
• BYD to set up first India EV factory near Hyderabad, eyes 600K cars yearly
• NSE IPO hangs in the balance as SEBI flags regulatory gaps in fresh letter
• RBI to double foreign investor cap in listed firms to 10% to boost inflows
• India’s coal demand hit an all-time high in 2024: IEA
• US pauses financial contributions to WTO, trade sources say
• Fed's Collins says it is clear tariffs will drive inflation up near term
• Trump threatens ‘far larger’ tariffs if EU and Canada unite to do ‘economic harm’ to the U.S.
• Adani Restores Power Supply to Bangladesh as Payments Resume

Daily Mantra
The joy of life comes from our encounters with new experiences, and hence there is no greater joy than to have an endlessly changing horizon, for each day to have a new and different sun.