The US labour market’s continued to resilience finally weight on global equities, including India’s. The markets were debating if the Federal Reserve can hold interest rates again this month, but private payroll data on Thursday dashed such hopes.

The monthly non-farm payroll data came softer than expected, but it was not soft enough to afford Fed the luxury to hold off rates.

Stocks ended their winning run on Friday and bond yields continued to rise as investors felt demand at successive weekly auctions was waning.

The market now awaits a string of data releases including inflation in US and in India. It is, however, expected that the data sets will not fundamentally alter the path the central banks are on:

US – To raise interest rates two more times.

India – To maintain a hawkish pause with an intent to hike if inflation starts to rise again.

Indian Markets Last Week:

The Sensex touched a historical high of 65,898.98, while the Nifty breached the 19,500 level before paring some gains. The stock market saw a strong bounce at the start of the week, fuelled by good corporate first-quarter results and foreign capital inflows.

Indian government bond yields continued to rise after U.S. yields broke through important technical levels on bets of future rate hikes, while fresh supply of debt locally weighed on investor mood even more last week.

The rupee plummeted to its lowest in seven weeks against the US dollar on expectations that the Federal Reserve may raise interest rates more aggressively than expected this year. After hitting its lowest level since May 30 at ₹82.75 earlier in the day, the rupee lost 0.28% to ₹82.74 per dollar from ₹82.51.

Global Markets Last Week:

US stocks fell after the string of jobs reports dampened expectations that Fed would hold rates again this month. The S&P 500 fell 1.2% over the shortened holiday week. The Dow slipped 673 points, or 2%, for the week. Analysts said the jobs data has slowed but it remains strong enough to warrant more interest rate hikes by the Fed. While policy makers say it is possible for the Fed to bring down inflation without triggering a recession, the market remains sceptical.

US treasury yields ended mixed on Friday, up at the longer end, as non-farm payrolls grew lower than expected. Yields had jumped on Thursday after the ADP National Employment data showed private payrolls rose higher than what was expected. The Friday’s data was softer than expected but strong enough for the market to expect a hawkish Fed. The US central bank is expected to be on course to raise interest rates at least twice in the coming months.

US Dollar fell sharply on Friday as the month jobs data came softer than expected in big contrast to the ADP data on Thursday. The dollar index fell as traders assessed for how long the Fed will keep interest rate high. The market now awaits the release of CPI data this week. Traders preferred to avoid big positions. Yen was firm on view the central bank there will support the local unit.

Corporate Bonds

Bond Issuances of The Past Week

Secondary Market

Yields on corporate bonds ended flat across tenures in the secondary market last week as the persistent lack of domestic triggers kept market participants at bay. Few mutual fund houses and banks were active in the secondary market.

Outlook For This Week

Indian markets may take further cues from a string of domestic data to be released this week such as CPI and WPI inflation, IIP data, Money supply, bank credit pickup for month of June. Stocks may open mixed on Monday, while Government bond yields may remain steady eyeing macroeconomic data releases.

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