IGI Logo

Key Events

U.S. Economic Shrinks Slightly Less Than Previously Estimated In Q1

A report released by the Commerce Department on Thursday showed the U.S. economy shrank by slightly less than previously estimated in the first quarter of 2025. The Commerce Department said real gross domestic product edged down by a revised 0.2 percent in the first quarter compared to the previously reported 0.3 percent dip. Economists had expected the modest decrease to be unrevised. The slightly smaller than previously estimated decline reflected an upward revision to investment that was partly offset by a downward revision to consumer spending.

U.S. Weekly Jobless Claims Climb More Than Expected To 240,000

First-time claims for U.S. unemployment benefits rose by more than expected in the week ended May 24th, according to a report released by the Labor Department on Thursday. The report said initial jobless claims climbed to 240,000, an increase of 14,000 from the previous week's revised level of 226,000. Economists had expected jobless claims to inch up to 230,000 from the 227,000 originally reported for the previous week.

UK Vehicle Manufacturing Logs Weakest Start To Year Since 2009: SMMT

UK automotive manufacturing registered its weakest start to a year since 2009, the Society of Motor Manufacturers & Traders, or SMMT, said Thursday. Car and commercial vehicle production decreased 15.8 percent on a yearly basis to 59,203 units in April. Auto production fell to the lowest level for the month since 1952, excluding 2020 when the first Covid lockdown effectively saw manufacturing cease, the lobby said. Moreover, the April result caps off the sector's weakest start to the year since 2009. Production for home market and foreign market decreased 12.1 percent and 17.0 percent, respectively.

Chart With Interesting Observations

EM High-Yield Bonds Gains While US Yields Rose

* Emerging market debt from India, Indonesia, Brazil, and South Africa has outperformed its peers since President Trump's April 2 nd tariff announcement. This performance contrasts with four prior episodes since 2021 where rising US benchmark yields strengthened the dollar and hurt EM bonds. This time, the dollar's fall has provided compensating currency returns, mitigating the duration spillover from higher US yields.

* Dollar-funded investments in higher-yielding EM bonds are typically unhedged due to the prohibitive cost of protection relative to their lower-yielding counterparts, leading to amplified foreign exchange gains when the dollar weakens.

* India's yield movement this quarter shows the most significant deviation from its historical average, with a ratio of -0.88, compared to -0.57 for Indonesia, -0.55 for Brazil, and -0.50 for South Africa. This underscores the extent to which Indian yields have declined relative to their historical mean. In contrast, lower-yielding peers such as the Czech Republic and South Korea are more vulnerable to surges in US yields because of their tighterspreads.

Please refer disclaimer at https://www.hdfcsec.com/article/disclaimer-1795

SEBI Registration number is INZ00017133