PEACE PROPOSAL STILL ON TENTERHOOKS

PEACE PROPOSAL STILL ON TENTERHOOKS

The US Iran peace proposal continues to be on tenterhooks. There are several contentious issues on which both countries do not see eye to eye. Iran wants guarantees about the US not imposing future sanctions and also de-freezing of its funds locked abroad. The US, on the other hand, continues to insist on unconditional opening of Straits of Hormuz.

The real bone of contention between the US and Iran is not nuclear enrichment but opening up the Straits of Hormuz. For the US, it would be the best signal that they have the upper hand in the war. For Iran, they have global leverage only as long as the Straits of Hormuz are shut. Unless this deadlock is resolved, peace is likely to be elusive between the US and Iran.

US BOND YIELDS FLAT FOR THE WEEK

Key takeaways on US bond yields data:

US bond yields were flat, tapering marginally from 4.378% to 4.364%

With US unemployment steady at 4.3%, rate cuts look tough for now

For now, bond yields are elevated due to the persistent inflation risk

FOMC minutes next week will offer a clearer picture on rates trajectory

For the week; US 10-year bond yields scaled a high of 4.464% and a low of 4.314%.

US DOLLAR INDEX (DXY) RANGEBOUND WITH WEAK BIAS

Key takeaways on US Dollar Index data:

The 100 level on DXY looks increasingly elusive for the time being

For the week, the dollar index fell from 98.16 levels to 97.90

With Fed rate cuts unlikely for now, US bond yields should be in this range

Despite the 14% correction in dollar, the greenback is still under pressure

For the week, US dollar index (DXY) touched a high of 98.58 and a low of 97.63.

INDIA BOND YIELDS FALL AS FPI BOND SELLING ABATES

Key takeaways on India Bond Yields data:

For the week, India 10-year yields fell from 7.018% to 6.984%

While rate cuts are unlikely, the focus will shift to CPI inflation

Bloomberg estimates that April inflation could spike to 3.9%

For now, the bet is that supply chains should normalize soon

For the week, India Bond Yields touched a high of 7.055% and a low of 6.865%.

RUPEE (USDINR) SHOWS SOME STRENGTH TOWARDS CLOSE

Key takeaways on USDINR data:

The Indian rupee strengthened from ₹94.905/$ to ₹94.441/$ for the week

FPI net selling continues, but the quantum of selling is sharply lower

Brent has been volatile, but higher OPEC supplies should sober oil prices

RBI continued to support the rupee during the week around the ₹95/$ level

Rupee continues to be vulnerable to geopolitical risks. For the week, the USDINR touched a high of ₹94.075/$ and low of ₹95.466/$.

CRUDE OIL – TRENDS LOWER ON PEACE HOPES

Key takeaways on Brent Crude Prices:

Brent Crude surged to $115.30/bbl this week, but closed at $101.29/bbl

Markets are keeping the faith that a US-Iran deal will finally be worked out

Short term concerns pertain to drawdowns and supply resumption

Brent Crude is expected to settle at a new normal of above $95/bbl

For the week, Brent Crude touched a high of $115.30/bbl and a low of $96.03/bbl.

SPOT GOLD MOVES HIGHER ON PEACE HOPES

Key takeaways on spot gold (XAU) price data:

After a cautious start, spot gold closed higher at $4,714.89/oz

US unemployment at 4.3% means rate cuts may be off the table for now

Gold is still down -15.7% from its late January peak of $5,595/oz

India spot gold is currently trading at ₹1,54,882/10 grams

For the week, spot gold touched a high of $4,765.17/oz and low of $4,500.85/oz.

SPOT SILVER RALLIES SHARPLY FOR THE WEEK

Key takeaways on spot silver (XAG) prices:

Silver surged for the week from $75.3610/oz to $80.3474/oz

Hopes of peace and global recovery led silver prices higher

Spot Silver is still down -34.0% from its late January peak of $121.67/oz

India spot silver is currently trading at ₹2,64,182 / Kilogram

The Gold-Silver Ratio of 58.68X has stabilized at a lower new-normal range

For the week, spot silver touched a high of $82.220/oz and low of $72.215/oz.