The Morning Edge: Fed Officials Urge Policy Patience as Tariff Effects Remain Unclear

QUICK SNAPSHOT
Global Sentiment:  Risk-on 
Factors: Earnings Optimism, Easing Tariff Tensions

TODAY’S WATCHLIST
  - Jan-Mar Earnings:  Reliance Industries, Maruti Suzuki India
  - IMF and World Bank Spring Meetings

THE BIG STORY
US Federal Reserve officials struck a unified tone of patience on Thursday, signalling no near-term policy changes as they assess the economic fallout from the Trump administration's shifting tariff regime. Fed Governor Christopher Waller told Bloomberg the central bank likely won't have clarity on trade impacts until summer, characterizing tariffs as a "one-time price level effect" that may be partially offset by weaker demand and employment. His view was echoed by Cleveland Fed President Beth Hammack on CNBC, suggesting the FOMC consensus favours waiting beyond the June meeting before considering adjustments.
While Waller acknowledged tariffs could boost prices, he downplayed persistent inflation risks, noting weakening consumer spending and household wealth may neutralize some impacts. The cautious stance comes as Beijing presses for tariff relief following Treasury Secretary Bessent's hints at potential de-escalation, leaving markets caught between Fed patience and whipsawing trade developments. With officials projecting months-long uncertainty, the central bank appears set to maintain its holding pattern even as tariff whiplash continues rewriting economic forecasts.

Data
The latest data revealed stronger-than-expected US durable goods orders, which surged by 9.2% in March, driven largely by robust demand for commercial aircraft, though other sectors showed muted activity amid economic uncertainty. This followed a modest 0.9% rise in February, as businesses remained cautious due to trade-related headwinds. Meanwhile, US jobless claims edged up slightly, with initial unemployment filings increasing by 6,000 to a seasonally adjusted 222,000 for the week ending 19 April, signalling continued labour market resilience. Economists had anticipated the rise in claims, reinforcing the view that the jobs market remains stable for now. 

WHAT HAPPENED OVERNIGHT 
US stocks rose for a third straight session on Thursday, led by tech shares as ServiceNow's earnings beat boosted AI-related mega caps, though consumer stocks slumped with Procter & Gamble (-3.7%) and PepsiCo (-4.9%) cutting forecasts due to weak demand. The Nasdaq outperformed amid easing US-China trade tensions, while mixed earnings from Chipotle and American Airlines highlighted lingering economic uncertainty. The rally showed cautious optimism, but tariff risks and consumer weakness kept gains in check.

US Treasury yields fell sharply on Thursday, with the 10-year yield dropping 7.8 basis points to 4.309%, as markets grew hopeful about potentially softer tariffs and priced in a possible June Fed rate cut.  The bond market rally suggests investors are cautiously optimistic about easing both trade tensions and monetary policy.

The US dollar softened on Thursday, with the euro gaining 0.63% to $1.1383 and the yen strengthening 0.58% to 142.61, reversing some of Wednesday's rally. Despite its mid-week rebound, the greenback remains one of the worst-performing major currencies this month, weighed down by persistent volatility around US trade tariffs.

Brent crude oil prices edged higher on Thursday as a weaker US dollar and fresh signs of progress in US-China trade talks helped counterbalance concerns over rising supply. Markets remained cautious amid expectations that OPEC+ could push for a second consecutive month of accelerated output increases in June. Adding to the supply-side uncertainty, Kazakhstan—an important OPEC+ ally—signalled it would prioritise national interests over production cuts, citing constraints at its major oil fields. 

Day’s Ledger
Economic Data

• US April Michigan Consumer Sentiment index
• US Baker Hughes oil rig count
• UK Retail sales for March
• India weekly FX reserves

Corporate Actions

• Jan-Mar Earnings:  Reliance Industries, Maruti Suzuki India, Shriram Finance, Automotive Stampings and Assemblies, Cholamandalam Investment and Finance Company, Hindustan Zinc,  Jayaswal Neco Industries,  Kesoram Industries, Mahindra Holidays & Resorts India,  Navkar Corporation,  Atul,  Chennai Petroleum Corporation,  Force Motors,  L&T Finance, Oracle Financial Services Software,  Orient Electric,  Poonawalla Fincorp,  RBL Bank,  Rossari Biotech,  Tata Technologies, Tejas Networks, VST Industries, Zensar Technologies, DCB Bank, Lloyds Metals And Energy, Bank of Maharashtra, Dr. Lal Path Labs, Mahindra Lifespace Developers, Oriental Hotels, Sarla Performance Fibers, Sasken Technologies, Motilal Oswal Financial Services, Aurum PropTech, New Delhi Television, 
• Aurum PropTech to consider fund raising plan
• Ramco Cements to consider fund raising plan

Policy Events

• FOMC Member Kashkari Speaks
• IMF African Department press briefing 
• IMF and World Bank Spring Meetings

TICKERS

• ACC reports 20% drop in net profit for March quarter amid rising costs, sales grow
• ADANI ENERGY Jan-Mar profit soars 79% on new projects, smart meters push; FY25 bottomline dips
• AXIS BANK remains cautious amid tariff uncertainty, reports flat Jan-Mar profit
• Container Corp, GAIL ink pact to build LNG infra at terminals
• Delhi HC backs tribunal ruling in fly ash tax case involving NTPC arm
• Eternal denies CEO exit rumours at food delivery arm, says Rakesh Ranjan remains in role
• Minda Corp to cut stake in JV Furukawa Minda Electric to 17.5%
• PB Fintech invests ₹5.39 billion in subsidiary PB Healthcare Services
• RITES bags ₹280 million order from Mahanadi Coalfields for rail project consultancy
• SBI Life Jan-Mar profit flat; FY25 bottomline up 27% despite weak investment income
• Supreme Industries Jan-Mar profit drops over 17% YoY; FY25 earnings hit by infra spend slowdown, resin price volatility

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