The Morning Edge: US Poised to Strike First Tariff Deals as India Emerges as Lead Test Case

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Global Sentiment:  Risk-on
Factors:  Earnings, Trade Talks 

TODAY’S WATCHLIST

• US March trade data

Bajaj Finance, Bajaj Finserv, and Trent earnings
  
THE BIG STORY
US Treasury Secretary Scott Bessent signalled Monday that Washington is closing in on its first tariff-avoidance agreements, with India likely to be among the initial partners to secure a deal as early as this week. The announcement follows "very good" proposals from multiple trading partners seeking exemptions from President Trump's sweeping tariffs, which are set to escalate dramatically on July 8 unless negotiations succeed during the 90-day pause period. Bessent revealed that 15-18 major economies are now engaged in bespoke talks, with Japan having conducted "substantial negotiations" and other Asian partners making progress—though all final agreements will require Trump's personal approval. 

The developments mark the most concrete progress since Trump upended international commerce with a 10% universal tariff (excluding Canada/Mexico) and 145% duties on Chinese goods—measures that triggered immediate retaliation from Beijing. As the clock ticks toward the July deadline, Bessent's comments suggest the administration is prioritizing bilateral deals over multilateral solutions, with India emerging as a test case for whether the US can convert tariff threats into renegotiated trade terms. The outcome could determine whether the world faces a new wave of protectionism or an unorthodox pathway to trade restructuring.

DATA
British food prices rose 2.6% year-on-year in April—accelerating from March's 2.4% increase and marking the sharpest climb since May 2024's 3.2% peak—according to the British Retail Consortium's latest survey. While overall shop prices remained in deflationary territory (-0.1% YoY vs -0.4% in March), retailers warned of impending price pressures from rising operational costs, including a new packaging levy effective October that threatens to reverse the broader trend. The data reveals a bifurcated consumer landscape where grocery bills continue their upward trajectory even as non-food retailers maintain discounting strategies.

WHAT HAPPENED OVERNIGHT 
US stocks indices S&P 500 and Dow eked out modest gains in a volatile session on Monday, as investors cautiously awaited developments in tariff talks amid a packed week of earnings and economic data releases. Tech sector weakness dragged the Nasdaq lower. Focus now turns to earnings reports from Amazon, Apple, Meta and Microsoft later this week, which could determine whether the "Magnificent Seven" can sustain their market leadership.

US Treasury yields declined across the curve on Monday as investors adopted a cautious stance ahead of key economic data releases this week. The benchmark 10-year yield fell 5.6 basis points to 4.21%, while the 30-year bond yield dropped 5.2 basis points to 4.686%. Short-dated yields saw the sharpest move, with the 2-year falling 7.7 basis points to 3.685%, suggesting markets continue to price in potential monetary policy easing.

The US dollar weakened broadly on Monday as investors adopted a cautious stance ahead of a pivotal week filled with economic data and developments on the trade front. With markets anxiously awaiting signals on the progress of US-China trade talks, the dollar index slipped 0.8% to 98.93. The euro climbed 0.51% to $1.1422, while the dollar dropped 1.13% against the Japanese yen to 142.05. Sterling also firmed, rising 0.9% to $1.3434, as traders braced for potential volatility amid signs that President Donald Trump's trade policies could be starting to bite.

Brent crude oil prices eased on Monday as investors weighed the prospect of a potential supply boost from OPEC+ against the backdrop of persistent trade uncertainties. US crude fell 1.54% to settle at $62.05 per barrel, while Brent crude slipped 1.51% to close at $65.86 a barrel, with sentiment remaining cautious amid concerns that rising output could further pressure a market already grappling with fragile demand.

Day’s Ledger

Economic Data:

• US March trade data
• US April Consumer Board Consumer Confidence index for April
• US March Job Openings data
• EU Business Climate and Economic Sentiment Indicator for April

Corporate Actions:

• Jan-Mar Earnings:  Bajaj Finance,  Bajaj Finserv,  Trent,  Ambuja Cements,  Bharat Petroleum Corporation, Indian Railway Finance Corporation, Capital Small Finance Bank, CEAT, CIE Automotive India, Davangere Sugar Company, DB (International) Stock Brokers, De Nora India, DELPHI WORLD MONEY, Fedbank Financial Services, Five-Star Business Finance, Indiamart Intermesh, IndoStar Capital Finance, Jana Small Finance Bank, Nath Bio-Genes (India), NDL Ventures, Orbit Exports, PCBL Chemical, Praj Industries, Punjab & Sind Bank,  Schaeffler India, Shoppers Stop, Star Health and Allied Insurance Company, Tamil Nadu Newsprint & Papers, UMIYA BUILDCON, UTI Asset Management Company, Vishal Mega Mart, 
• NTPC Green Energy to consider fund raising
• Bajaj Finance to consider stock split and bonus share

TICKERS

• Arun Khurana resigns as INDUSIND BANK Deputy CEO amid derivatives controversy
• APOLLO TYRES raises stake in Green Infra Wind Power Projects to 21.27%
• CESC signs 25-year pact to buy 300 MW hybrid power from subsidiary
• CG POWER launches India's first cordless smart water pump controller
• DR REDDY'S ties up with Sanofi to distribute Beyfortus in India
• Fire halts operations at AUROBINDO PHARMA’s Penicillin-G unit in Kakinada
• Global Health to invest ₹5.10 billion in 400-bed super specialty hospital in Guwahati
• Ola Electric launches '72-hour rush' sale ahead of Akshaya Tritiya
• Vorwerk selects WIPRO to manage and transform IT ecosystem

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