Rediscovering India
Chart of the Week:
U.S. Ends Longest Shutdown; Upcoming Data Will Guide December Rate Decision
The U.S. government’s longest shutdown ended on Nov 9 after the Senate reached a funding agreement, later signed by President Trump. Republicans conceded on the Affordable Care Act to secure support from eight Democratic senators. The deal ensures federal funding through regular appropriations until Sept 30, 2026. The shutdown caused widespread disruption—including thousands of flight cancellations and ongoing federal employee layoffs. The CBO estimates the stoppage will shave 1% off 4Q25 GDP growth.
Market Recap 1:
Wave of Data Releases Raises Uncertainty, Pressuring High-Valuation U.S. Tech
President Trump signed the negotiated funding bill, ending the longest U.S. government shutdown and briefly lifting global market sentiment. However, concerns quickly resurfaced as a large backlog of unreleased economic data increased uncertainty. Several Fed officials also emphasized the need for caution. Fed Watch shows the probability of a 25 bps December cut sliding rapidly below 50%, signaling heightened uncertainty—placing high-valuation tech stocks under the most pressure. Adding to sentiment weakness, SoftBank announced a full exit of its Nvidia holdings early in the week, followed by ARK reducing Tesla exposure. Rising “AI bubble” concerns dragged the Philadelphia Semiconductor Index and Nasdaq lower, with Information Technology, Consumer Discretionary, and Communication Services leading declines.
Market Recap 2:
Uncertainty Around Upcoming U.S. Data Lifts Gold While Treasuries Weaken
With several key economic releases still pending and Fed officials striking a cautious tone, the probability of a 25 bps cut in December has quickly fallen below 50% in rate futures. This pushed U.S. Treasury and IG bond yields higher. Even so, global bond markets remain constructive on the broader U.S. easing cycle, as short-term uncertainty does not alter the medium- to long-term path toward rate cuts. Steady corporate earnings continue to support credit performance, while EM local-currency bonds outperformed on ongoing EM rate cuts and a softer USD.
What’s Trending:
China CPI Beats Expectations; Consumer–Producer Price Gap May Support Corporate Margins
China’s October CPI and core CPI rose 0.2% and 1.2% YoY respectively, with core inflation continuing its upward trend. Headline CPI, including food and energy, reached its highest level since February. Meanwhile, PPI fell 2.1% YoY, though the decline narrowed.
In Focus 1:
India Lags EM This Year, but Earnings Expectations Rebound Post-Results
India has significantly underperformed other emerging markets this year. As of Nov 12, the MSCI India Index trails the MSCI EM Index by about 25%. Over the past 30 years, MSCI India typically outperforms EM by around 5%. Yet YTD returns show MSCI India up 7.3% versus EM’s 30.9%—the largest single-year underperformance in three decades.
In Focus 2:
RBI Easing and Fiscal Improvement Support India’s Macro Outlook and Corporate Fundamentals
The Reserve Bank of India has delivered four 25 bps cuts in 2025—its fastest easing cycle in a decade (excluding the pandemic)—while introducing measures to improve banking liquidity and relax financial regulation. Given the lagged effect of monetary transmission, economists expect looser financial conditions to support a recovery in economic growth over the next two years. Goldman Sachs forecasts India’s nominal GDP growth to return to double digits, driving a rebound in corporate revenue.
