Categories: Weekly Dose

The Signal (weekly highlights)

  1. Fed minutes raise rate hike concerns

The minutes from the Fed meeting show that members are now concerned about the inflation which was deemed to be transitory in nature. The meeting summary noted that the officials would be willing to raise interest rates sooner than participants currently anticipated.

The recent inflation numbers came in at 6.2% which has been the highest in 3 decades. The rate hikes and bond tapering can now be seen faster than earlier anticipated.

  1. World markets under grip of fresh covid concerns

South Africa has raised concerns about a new covid variant which has 10 mutations compared to 2 in the earlier delta variant. Europe has also seen a surge in covid cases and Slovakia becomes the 2nd European country after Austria to announce lockdown post a shoot up in covid cases.

A vaccine hesitancy has been witnessed in the continent and a lot of countries have been mulling to make vaccine doses mandatory now.

  1. India to release 5 million barrels of crude from reserves in bid to cool prices

India will release 5 million barrels of crude oil from its strategic petroleum reserves in a concerted effort to bring down global crude oil prices. This is roughly a day’s consumption of the country

The development has been in line with the United States releasing 50 million barrels from their strategic reserve. This has brought a marginal cooling in the brent prices in the global markets

  1. India Inc to show significant EBITDA growth in next 12-18 months

Benefiting from strong consumer demand and high commodity prices, Indian companies will show significant growth in EBITDA over next 12-18 months, according to Moody’s.

The factors working in favor include growing government spending on infrastructure, easing of supply chain disruptions which will ramp up semiconductor supplies and the steady vaccination against covid.

  1. Borrowing costs for states lowest since April

The weighted average borrowing cost on state development loans (SDL), across states and tenure has fallen this week to the lowest since early April 2021. In the current week, the average borrowing cost has been 6.62%, which is also 9 basis points lower than a week ago period

There are expectations of lower borrowing requirements by many states due to significantly improved fiscal balances of states so far in FY22 and robust GST collections which has helped keep the borrowing cost low

Fisdom Research

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