Indian Central Bank Drains $10 Billion to Lift Short-Term Rates
India's central bank drained 849.75 billion rupees ($10 billion) of excess cash from the banking system in its first such operation in seven months, aiming to lift overnight borrowing costs.
The Reserve Bank of India withdrew funds via a 7-day variable rate reverse repo auction at a 5.49% cutoff yield on Friday, it said in a statement. The RBI had planned to soak up one trillion rupees.
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PCE report: New inflation data shows price increases accelerated
Tariff-related uncertainty is clouding the Federal Reserve's path forward, even as today's inflation data gives mixed Finance Senior Reporter Jennifer Schonberger joins Morning Brief to explain how a divided Fed is weighing sticky inflation and the lagging effects of tariffs as markets eye a potential rate cut in watch more expert insights and analysis on the latest market action, check out more Morning Brief here. and that, uh, report we got out this morning on the Fed's preferred inflation gauge, the personal consumption expenditures index, which has both personal income and inflation has a little bit for both the Hawks and the doves on the Fed. Uh, inflation coming in a bit higher than expected, so a point for those Hawks, and personal income and spending coming in a bit lower, so a point for those doves. But I think there may be some one-off issues going on here. Uh, we saw a lot of front loading with tariffs earlier this year, and we're seeing that reverse in this report. Also, it was pointed out that the decrease in personal income primarily affected government social benefits to people and farm proprietors incomes. So I'm not really worried that the Fed is going to be too worried about the personal income side of the economy based specifically on this report. This seems like sort of one-off. So this doesn't really change the calculus from what I can tell for the Fed. Earlier this week, we heard from Fed chair J. Powell, who testified before Congress, and he says he doesn't really think that we've really seen the impact of tariffs on inflation yet. He's really looking to those summer months, June, July, and August to see what the impact is going to be, and if those reports come in mild, then he seemed to imply a rate cut could be in play for September. But this very much points to a continuation of the wait and see camp. One thing that is going to be very interesting to me to watch is that we know that there are two very clear doves on the Fed committee, both Fed Governor Waller and Mickey Bowman. And Bowman said earlier this week on Monday in a speech that if inflation comes in mild ahead of the July meeting, she would support a rate cut. Well, this morning was a bit of a gray area. So I'm really going to be looking to see whether those two governors end up dissenting at the July meeting. But it's very clear we have a divided Fed, and this report certainly isn't going to settle that debate. How? And within that, Jennifer, just to follow up on that, how could this divided Fed be further impacted in their at least thought process, especially coming off of tariff policy that they needed to see how it played through and then waiting for deals, waiting for clarity, which we're just hearing this morning, of course, on the US and China deal and 10 more, according to Howard Lucknik, that are set to come within days here, how that could also impact what their waiting to show through in the data going into those meetings where they're anticipated to start to kick off some of the 50 basis points of cuts that markets are anticipating by the end of the year? Yeah, Brad. I mean, Chair Powell said very clearly this week that if uncertainty were to lift, then that would certainly help the case for rate cuts. But it really comes down to what is the effective tariff rate. And while we did see a deal announced on China on those rare earth minerals, it's unclear whether we have any settling on the tariff rate for China and for any of these other countries. So I think there's still a lot of information that the Fed needs to receive, and again, Chair Powell had said it's going to take time for a lot of this to work through the economy. The three major things that are going to be important for whether tariffs have an impact on inflation are one, the effective tariff rate, two, inflation expectations, and three, how long it takes for those tariffs to be passed through to prices. Is it going to be quick, which could be maybe like a one-time reset in price, or is it going to be slower, which would be a case for more persistent inflation. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Time Finance reports £217m gross lending-book for FY24/25
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JPMorgan, Goldman Sachs' new highs: A 'good sign' for the economy
Nvidia's (NVDA) record run isn't the only big move on Wall Street this week: JPMorgan Chase (JPM) and Goldman Sachs (GS) have also hit all-time highs. Truist co-chief investment officer and chief market strategist Keith Lerner, Yahoo Finance Senior Business Reporter Ines Ferré, and Yahoo Finance Senior Reporter Allie Canal join Opening Bid host Brian Sozzi to break down what's behind the surge in bank stocks and how investors should approach the sector. To watch more expert insights and analysis on the latest market action, check out more Opening Bid here. While you have been paying attention to Nvidia's record highs this week, JP Morgan and Goldman Sachs are also at all-time highs as well. The drivers you ask? Even if you didn't ask, I'm going to tell you. No signs of a rate cut from the Fed, more volatility in the market, and likely easing financial regulations. Veteran bank analyst Mike Mayo telling me this morning, he's still bullish on the banks in large part because of easing capital requirements. Jumping into the Yahoo Finance platform, I find it interesting, you see the platform right there, that JP Morgan and Goldman Sachs still trade at a discounted forward PE ratio versus the broader market given all these tailwinds. They do still trade at their historically relatively high price-to-book ratio. A lot of wonky stuff there, but all very important for making investment decisions. Uh still with me is Keith Lerner, Ali Canal, and Ines Ferre. Keith, well, uh the good thing about having you here amongst many reasons, you actually work at a bank. So, help us understand what the market might be seeing in some of these big bank stocks. Yeah, well, first of all, I think it's a good sign that you're seeing these big banks, um, break out to new highs. That's not something you typically see right before a recession. And I think what you're seeing is one, you're seeing a steeper yield curve, that's a positive. I I think, you know, the M&A and IPO market was pretty much shut down in the first half. That's starting to pick up. That should accelerate in the second half as well. Eventually, we do think that the the Fed likely cuts rates in the back half as well. And then the big part as you already mentioned is the deregulation part as well. So, it is mixed somewhat with some within the sector, but um especially with more volatility as well that you've seen, it is certainly good for some of the the larger uh financials. And again, a good sign technically that they're that they're leading the uh broker dealer index just broke out. Now, how should investors, Keith, let me just stay on you for a second. How how should investors value these these stocks? You heard me right there talk about the P ratios, it's trading at a discount relative to the broader market, price to book still relatively high. I was looking at a good note from RWB this morning noting that JP Morgan is trading at record high valuations. Should investors just ignore that and ride this momentum because we are going to get easier regulations? Well, I wouldn't ignore them and those high valuations may suggest the upside will be may be somewhat constrained over time, but I also think you have to remember coming out of the the financial crisis, you know, the capital ratios are a lot um higher, the financial system's a lot stronger as well. So, I think a lot of these financial companies are in a better position. So it, you know, depending depending how far you're looking back, it makes sense that they're trading somewhat more at a premium valuation, and there's also the overall market's trading at more of a premium valuation. So it makes sense that um that you'll see some follow through, and you're actually seeing those higher quality names that investors have more confidence with um, you know, have that premium, which to me makes some sense. Uh Ines, uh you know, Keith mentioned a good point on on volatility in the markets. I just, I'm thinking through what we've seen in the oil markets, I'm seeing what's happening in the crypto markets and and you would have to think, you know, on those second quarter earnings calls with the big banks, they're going to really hype up how that volatility is shaping their bottom lines and how it could continue to shape the bottom lines in the back half of this year. Yeah, no doubt, but um as you know, as Keith was alluding to, I mean this is very, this is very good for the banking sector in general. Um the fact that there we are seeing now, we've seen peak regulation when it comes to banks. So these stress tests are expected to come in uh very in in putting banks in a very favorable light. Um I was struck by the fact that expenses, regulation related costs, from one of the analyst notes this morning, are estimated at 20% of the total bank expenses. So this is going to free up a ton of capital. But as you mentioned, yes we've seen volatility in different areas. One thing I will mention about crypto, it is going to change the way uh financial services are um are done in many aspects. Um just one note on the stable coin which I know that you know that I've been covering quite a bit. Stable coins is going to be very, very significant uh when it comes to uh these stable coin issuers are big buyers of short-term treasuries. This is going to be huge. This gives incentives for the government to uh work alongside stable coin issuers. So this is going to sort of revolutionize the financial sector. And you could type in Ines Ferre into the top of Yahoo Finance in that search bar, read all her work uh because it's really good stuff on all things crypto. Ali, uh you're in the zone today. Last 30 seconds, do you have a big call on the banks? Why not just throw caution to the wind, right? Yeah, I you talked about that note that you flagged, Brian, from Barrett and they did wave caution on some of those mega cap names. JP Morgan, they downgraded to underperform, Bank of America to neutral. Not because they are bad banks, they have fortress balance sheets there, but because they're just too expensive, as we've been discussing with these valuation concerns. JPM in particular trading at record valuations here with limited upside according to these strategists. And they argue that regional banks may be the better play here. Now, regional banks, they've just been so beaten down here, but the risk reward scenario just looks a bit more attractive on that front. So maybe we could see this big rebound here in regional banks, but I do agree with Keith that those high quality names, probably within this market that's very prone to headlines and volatility, you want to be focused there.
