Story of 6 key macro signals for the week to June 29, 2025

AN UNEASY MIDDLE EAST TRUCE, BUT PEACE PREVAILS

The Middle East is quiet, and President Trump has claimed credit. However, it is not clear if this will last. The only positive indicators that peace will continue is the sharp fall in oil and gold prices. That is broadly indicative of risk-haven buying reducing in the market.

India reported better than expected current account data for FY25. The $13.5 Billion current account surplus in Q4, allowed India to cut FY25 CAD to 0.6% of GDP. The US Q1-GDP contracted -0.5%, sharper than early indications. The US rate action would now be in focus.

• US BOND YIELDS CONTINUE TO TREND LOWER

The table captures US 10-year benchmark bond yields over the last 5 trading sessions.

Data Source: Bloomberg

The current bond yields at 4.27% are still far higher than the 3.75% levels in October 2024. During the week, the bond yields tapered further from 4.38% to 4.27%, but that was due to an increase in bond prices amidst demand for safe-haven assets. Markets will take some solace from Powell’s testimony that rate cuts will be possible, if tariff uncertainty is removed. Last week, US 10-year bond yields touched a high of 4.407% and a low of 4.240%.

• US DOLLAR INDEX (DXY) DIPS CLOSER TO THE 97 MARK

Here is the US dollar index (DXY), an index of dollar strength, over last 5 trading sessions.

Data Source: Bloomberg

The US dollar index (DXY) closed lower at 97.40. GDP contraction in Q1 by -0.5% led to a sharp fall in dollar index. Also, there are concerns that the “Big Beautiful Plan” proposed by Trump could have major repercussions for fiscal deficit. That has kept the dollar under pressure. Last week, the US dollar index (DXY) touched a high of 99.42 and a low of 97.00.

• INDIA BENCHMARK BOND YIELDS FLAT FOR THE WEEK

The table below captures 10-year India bond yields for the last 5 trading sessions.

Data Source: RBI

After falling from 7.05% in early 2025 to 6.31% levels; bond yields stabilized. This week, bond yields closed flat. With RBI shifting its stance from accommodative to neutral; there is not much room left to cut rates. The India-US bond yield spread is around 200 bps. In the last one week, the India 10-year bond yields touched a high of 6.330% and low of 6.247%.

• RUPEE BOUNCES BACK DURING THE WEEK

The table captures the official USDINR exchange rate for last 5 trading sessions.

Data Source: RBI

With tepid dollar index, USDINR strengthened this week to close at ₹85.45/$. Last week, the rupee gained nearly ₹1/$. The positive CAD data also helped the USDINR to emerge stronger. However, oil companies have continued to buy dollars to hedge exposures. In last one week, the USDINR touched a high of ₹85.422/$ and a low of ͅ₹86.871/$.

• BRENT CRUDE FALLS AMIDST IRAN-ISRAEL CEASEFIRE

The table captures the Brent Crude prices over last 5 trading sessions.

Data Source: Bloomberg

With the ceasefire between Iran and Israel, there is an uneasy calm in the Middle East and West Asia. At least, there is confidence that Straits of Hormuz will not be shut. Brent crude fell from $75.5/bbl at the start of the week to $66.8/bbl towards the end of the week. In last one week, Brent Crude prices touched a high of $79.40/bbl and a low of $66.12/bbl.

• SPOT GOLD SEES FALL IN SAFE HAVEN DEMAND

The table captures the international spot prices of gold in dollars per troy ounce (oz).

Data Source: Bloomberg

For the week, the price of gold tapered as the geopolitical risks reduced in the Middle East. However, BOFA has given a target of $4,000/oz for gold in 2026 on higher US fiscal deficit. During the week, gold touched a high of $3,399.25/oz and a low of $3,255.72/oz.