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* The truncated week ended on a positive note for India, as S&P upgraded India’s sovereign rating to “BBB” with a stable outlook vs “BBB-“ earlier. Immediate positive impact was witnessed in 10yr yields, which fell ~10 bps to 6.4%. INR is expected to moderate to 87.5/USD in the near term.

* Most awaited event would be the meeting between Trump and Putin tomorrow, which would decide the further course of Trump’s tariff policies. Meanwhile the US treasury secretary cautioned of higher secondary tariffs on India moreover he urged EU to align with US on this front.

* China unveiled a new policy, offering a 1% point annual interest subsidy on consumer and business loans, targeting 8 key services sectors to lower borrowing costs and boost domestic consumption.

* Trump extended the tariff truce with China for another 90 days. In response China reciprocated by suspending retaliatory levies. The extension sparked a global market rally due to the temporary easing of trade tensions.

* Domestic CPI inflation moderated to 8 year lows of 1.55% in July, but higher than market expectation of 1.4%, deflationary pressures in food prices aided headline. We see a bottoming out of inflation in Q2FY26, leaving limited room for policy easing.

* Inflation in US remained stable at 2.7% and was slightly below expectations. Surprisingly, the impact of tariffs were note evident. We expect the Fed to prioritise the weakness in labour market over inflation to deliver a 25bps rate cut in Sep-25.

* LIC is said to enter the bond forward rate agreement (FRA) market with transactions involving over 10 major domestic and foreign banks. This move should ease the pressure over the long term yields along with the latest rating upgrade by S&P.

* In the upcoming week, Markets would be closely monitoring comments from the Fed chairman in the Jackson Hole Symposium, on his assessment of the latest weakness in the labour market.

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