The Morning Edge - FOMC Minutes, Nikola

Federal Reserve officials signalled they were in no rush to cut interest rates in January, keeping a close watch on inflation and economic conditions. Minutes from the Fed’s January 28-29 meeting showed policymakers wanted to see more progress on inflation before making any moves. For now, the benchmark rate remains at 4.25-4.50%.

Many officials felt rates could stay high if the economy stayed strong and inflation remained sticky. The cautious tone follows the Fed’s one-percentage-point rate cuts in late 2024, with several policymakers stressing that inflation needs to cool further toward the 2% target before they consider another reduction.

The Fed is holding its ground for now, balancing inflation concerns with economic momentum. Good again for the dollar. What happens to the rest?

Data
US single-family homebuilding plunged in January, hit hard by severe snowstorms and freezing temperatures that disrupted construction activity. The Commerce Department reported on Wednesday that single-family housing starts, which make up most homebuilding, fell 8.4% to a seasonally adjusted annual rate of 993,000 units, marking a sharp reversal from December’s revised rate of 1.084 million units. The decline reflects both weather-related disruptions and a normalization after outsized gains in November and December, which were driven by recovery efforts following Hurricane Helene. The data adds to evidence that economic activity slowed early in the first quarter, echoing similar weather-driven impacts seen in retail sales and job growth last month.

Markets
Overnight

US stocks edged higher on Wednesday, with the S&P 500 securing its second consecutive record closing high as investors parsed the Federal Reserve’s January meeting minutes and assessed the implications of President Donald Trump’s escalating tariff plans. Since taking office four weeks ago, Trump has imposed a 10% tariff on all Chinese imports, adding to existing levies, and announced—then delayed—25% tariffs on Mexican goods and non-energy Canadian imports. The market’s cautious optimism was tempered by mixed corporate news: electric truck maker Nikola plummeted 39.1% after filing for Chapter 11 bankruptcy, while Shift4 dropped 17.5% on weak quarterly results and concerns over its $2.5 billion deal to acquire Global Blue, whose shares surged 17.5%. 

US Treasury yields eased Wednesday as the Federal Reserve’s January meeting minutes provided little surprise to investors, reinforcing expectations of a cautious approach to rate cuts. The yield on the 2-year Treasury fell 2.4 basis points to 4.272%, while the 10-year Treasury yield dipped less than 1 basis point to 4.535%, marking the third decline in four sessions for both. The muted reaction reflected a market already pricing in the Fed’s patient stance amid lingering inflation concerns and economic uncertainty.

The US dollar and Japanese yen strengthened on Wednesday as escalating market jitters over fresh tariff threats and ongoing Russia-Ukraine peace talks fuelled demand for safe-haven currencies. The yen rose 0.38% against the dollar to 151.49, while the greenback gained 0.11% against the Swiss franc to 0.904. The dollar index climbed 0.16% to 107.17, as the euro slipped 0.19% to $1.0425. Investor sentiment was further rattled by US President Donald Trump’s latest tariff announcements and concerns over inflation risks highlighted in the Federal Reserve’s January meeting minutes.

Brent crude oil prices hovered near a one-week high on Wednesday, driven by concerns over potential supply disruptions in Russia and the US, even as markets awaited the outcome of peace talks aimed at ending the Ukraine war. The dual dynamics of geopolitical tensions and supply risks continue to underpin oil prices, keeping investors on edge as they weigh the potential for both conflict escalation and diplomatic breakthroughs.

Day’s Ledger

Economy

• Germany January PPI Data
• Philadelphia Fed Manufacturing Index for February
• US Crude Oil Inventories Data
• US weekly Initial Jobless Claims Data

Companies 

• CIE Automotive India to announce December quarter earnings
• Gamco Ltd to consider bonus share issue
• Heads UP Ventures to consider fund raising plans
• Sanofi Consumer Healthcare India to announce December quarter earnings
• Steel City Securities to consider dividend

Policy

• Minister Sonowal to speak at Green Shipping Conclave
• Deutsche Bundesbank President Nagel Speaks  

Tickers 

• AUROBINDO PHARMA announced that the US FDA concluded the inspection of at Eugia Steriles, a stepdown subsidiary of the company, with 5 observations, which are procedural in nature.
• AWFIS SPACE SOLUTIONS announced that the Joint Commissioner of State Tax in Mumbai has ordered HDFC Bank and ICICI Bank to provisionally attach the operative bank accounts of the company.
• BHARAT FORGE’s subsidiary, Kalyani Strategic Systems, has signed a Letter of Intent with AM General, USA, for the supply of made-in-India advanced artillery cannons to the US.
• CYIENT announced the appointment of Sukamal Banerjee as Executive Director and Chief Executive Officer of its DET business.
• HFCL to sign an agreement with BSNL as the Project Implementation Agency under the BharatNet Phase-III Programme for executing a project worth ₹ 25.01 billion in the Punjab Telecom Circle.
• IRIS BUSINESS SERVICES has signed a MoU with the Government of Goa to support the growth of the MSME ecosystem in the state.
• NATIONAL FERTILIZERS to accept the proposal from the Department of Fertilizers for becoming part of the proposed joint venture company, with 18% equity, for setting up a new Ammonia-Urea Complex at the Namrup IV fertilizer plant in Namrup, Assam.
• ORCHID PHARMA announced that the US Food and Drug Administration (USFDA) conducted an inspection at the company’s Active Pharmaceutical Ingredient (API) manufacturing facility in Alathur, Tamil Nadu, during February 10-18.
• PATANJALI FOODS announced that the Supreme Court has quashed the demand order of ₹ 1.86 billion for the pre–Corporate Insolvency Resolution Process period raised by the Income Tax Department on the company.
• SUNDARAM CLAYTON board has approved the sale of the high-pressure and low-pressure aluminum die-casting businesses at the company’s Hosur plant to one or more third-party purchasers.
• TORRENT POWER’s subsidiary, Torrent Green Energy, has incorporated its subsidiary, Torrent Urja 30.
• WAAREE ENERGIES received an order for the supply of solar modules for 362.5 MWp from Khaba Renewable Energy, a subsidiary of Engie India.

Must Read

• Trump Calls Zelenskiy a ‘Dictator,’ Broadens Ukraine Attacks
• Burmans' ₹ 21.16-billion open offer for Religare gets tepid response
• RBI article signals economic momentum rise in H2FY25 amid strong demand
• US reciprocal tariffs to have limited impact on Indian economy: S&P
• IRDAI forms seven-member committee to review Insurance Act amendment
• Infosys offers lower bonus in Q3 ahead of pay hikes
• Rekha Gupta to be Delhi chief minister, oath ceremony tomorrow
• ‘Whatever you charge, I’m going to charge’: Trump on tariff talks with PM Modi
• Government set to hike deposit insurance to ₹ 8-12 lakh by end of February
• ONGC plans foray into ethane carrier business, seeks partner
• US SEC seeks India's help in Adani fraud probe
• Nikola, Once a Darling of Green Investment, Files for Bankruptcy

Daily Mantra
As long as men are free to ask what they must, free to say what they think, free to think what they will, freedom can never be lost and science can never regress. - Marcel Proust