Powell Defends Fed HQ Costs as US Data Shows Retail, Jobs Rebound

Global Sentiment: Risk-on
Factors: Corporate Earnings, US Retail Sales Data

TODAY’S WATCHLIST
 - Earnings: Reliance Industries, JSW Steel
 - Fed Waller Speech

THE BIG STORY
Federal Reserve Chair Jerome Powell defended a costly renovation project at the Fed’s Washington headquarters, responding to criticism from the Trump administration about alleged overspending and lack of transparency. In a letter to Office of Management and Budget Director Russell Vought, Powell said the upgrade approved in 2017 was essential for safety, structural integrity, and removal of hazardous materials. He stressed the project is subject to annual Board review and oversight by the Fed's inspector general. The renovation dispute marks the latest point of friction between the Fed and the White House. Meanwhile, foreign demand for US Treasuries rebounded in May, with holdings climbing to $9.045 trillion, up from April's $9.013 trillion, as investors returned following April’s tariff-driven outflows. Net purchases reached $146 billion, suggesting renewed confidence despite market volatility linked to Trump’s tariff policy.

DATA
US retail sales rose by 0.6% in June, rebounding more strongly than expected and signalling a modest improvement in economic activity. The increase followed an unrevised 0.9% decline in May and beat economists’ forecasts for a 0.1% gain. On a year-on-year basis, sales were up 3.9%, according to the Commerce Department. Supporting the upbeat tone, separate data from the Labour Department showed initial jobless claims fell by 7,000 to 221,000 in the week ending 12 July it is the lowest since April and well below expectations of 235,000 pointing to continued labour market resilience heading into the second half of the year.

WHAT HAPPENED OVERNIGHT
US stocks rallied on Thursday, with both the S&P 500 and Nasdaq Composite closing at record highs as upbeat corporate earnings and solid economic data reinforced confidence in consumer resilience. PepsiCo surged 7.5% after projecting strong results driven by demand for energy drinks and healthier beverages. Travel stocks also gained ground, with United Airlines up 3.1% on improved demand projections, while Delta and American Airlines rose over 1.4% each. Tech momentum continued as Nvidia, Marvell, and US-listed shares of TSMC all posted gains, helping the Nasdaq mark its sixth record close in seven sessions.

US Treasury yields ended slightly higher on Thursday in a choppy session as bond markets reacted to data showing a resilient economy. Retail sales and jobless claims indicated steady consumer activity and labour market strength, reinforcing the Federal Reserve’s cautious approach to rate cuts. The yield on the benchmark 10-year note rose marginally by 0.2 basis points to 4.457%, while the 30-year yield held nearly flat at 5.0135%. The 2-year yield, rose 2.4 basis points to 3.909%.

The US dollar climbed on Thursday following upbeat economic data, with the dollar index gaining 0.32% to 98.66, although it retreated slightly from session highs. The greenback strengthened 0.5% against the Japanese yen to 148.6 amid political uncertainty in Japan, where polls indicated Prime Minister Shigeru Ishiba’s coalition may lose its upper house majority. Meanwhile, the euro slipped 0.34% to $1.1594. 

Brent crude oil prices rose by over $1 on Thursday as ongoing drone attacks on oil facilities in Iraqi Kurdistan for a fourth consecutive day heightened geopolitical risk in the region. Brent crude settled at $69.52 a barrel, gaining 1.46%, while US West Texas Intermediate crude futures climbed 1.75% to close at $67.54, as supply disruption fears supported the market.

Day’s Ledger

Economic Data:

• Euro May Current Account 
• Fed Balance Sheet
• India Bank Loan Growth 
• India Deposit Growth 
• India Foreign Exchange Reserves
• Japan June Inflation Rate
• US May Overall Net Capital Flows 
• US June Housing Starts 

Corporate Actions:

• Apr-Jun earnings: Aarti Drugs, Alkali Metals, Arcee Industries, ASI Industries, Atul, Bandhan Bank, Deccan Bearings, Garuda Construction, Hatsun Agro, Hindustan Zinc, Indbank Merchant, IndiaMART InterMESH, Indian Overseas Bank, Indo Cotspin, Indosolar, Jayaswal Neco Industries, JSW Steel, Kerala Ayurveda, Khaitan (India), L&T Finance, Madhusudan Industries, Mahindra EPC Irrigation, Mangalore Refinery, Mastek, MPS, Mudra Financial Services, Neil Industries, Ponni Sugars, Reliance Industries, Roselabs Finance, Sampre Nutritions, Samsrita Labs, Shiva Cement, TPI India, Yaari Digital Integrated Services.
• 3I Infotech to consider right issue 
• Richfield Financial to consider non-convertible debentures issue
• Spandana Sphoorty to consider right issue 

Policy Events

• Fed Waller Speech

TICKERS

• 360 ONE WAM June quarter net profit rose 16.8% YoY to ₹2.85 billion; revenue from operations grew 7.3% to ₹9.11 billion. Other income fell YoY. Sequentially, net profit and revenue rose 14.1% and 11.1%, respectively.
• ADANI PORTS AND SEZ Moody’s reaffirmed its rating at ‘Baa3’ with a negative outlook, per company filing.
• AFCONS INFRASTRUCTURE won two road projects in Croatia worth ₹45.35 billion. Projects include a 9-km stretch in Metkoviy-Dubrovnik and 11.5 km in Slano–Puo Mravinjac. Completion expected in 42 months.
• ALOK INDUSTRIES June quarter net loss narrowed to ₹1.76 billion from ₹1.98 billion YoY; revenue fell 8.7% to ₹8.85 billion. Lower costs and a one-time ₹256 million gain supported results.
• AXIS BANK June quarter net profit fell 3.8% YoY to ₹58.06 billion; down 18.4% QoQ due to a sharp rise in provisions. Other income rose 25.5%, trading income surged nearly 250%. Asset quality weakened slightly.
• CEAT June quarter net profit declined 9.3% YoY to ₹1.35 billion; revenue rose 11.1% to ₹35.21 billion. To invest ₹4.5 billion in Chennai plant expansion; reappoints CEO Arnab Banerjee from Apr 2026.
• CLEAN SCIENCE AND TECHNOLOGY June quarter net profit rose 6.3% YoY to ₹700.63 million; revenue up 8.4% to ₹2.43 billion. Other income jumped; sequentially, profit and revenue declined.
• HDFC AMC June quarter  net profit up 24% YoY to ₹7.48 billion; revenue up 25% to ₹9.68 billion. AUM at ₹8.57 trln, up 21%. Operating margin at 36 bps of AUM. Equity AUM grew 19%, debt AUM 22%.
• PAYTM Cloud sets up 100%-owned Saudi Arabia unit named Paytm Company with 8.5 million SAR investment to expand digital payments in the Middle East.
• TATA COMMUNICATIONS June quarter net profit slumped 82% QoQ to ₹1.90 billion due to high base and lower other income; revenue dipped 0.5% QoQ to ₹59.60 billion. Board okayed ₹10 billion NCD issue and ₹1.24 billion acquisition of step-down unit.
• TATA MOTORS Punch SUV crossed 600,000 cumulative sales since launch in Oct 2021; contributed 36% to Tata's FY25 PV sales. Holds 38% sub-compact SUV market share.

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