There was little surprise when the US Fed chose to maintain status quo on rates in the Fed meeting concluded on 30th Jan. The Fed rates stay at the current level of 2.25-2.50%. More importantly, the Fed gave the most dovish stance since 2015 hinting at a patient approach to future rate hikes and also a gradual reduction in the tapering of the bond portfolio of the Fed. Both are to be interpreted as dovish statements from the Fed on interest rate outlook. However, the Fed also stuck to its original guidance of two further rate hikes this year, although the word “Patience” will assume lot more importance.
Even as the perception gap between the US and China has widened to a new high, the trade talks between the US and China take off over the weekend. Despite the scepticism and the practical difficulties of a trade deal, the top trade officials of the US and China will try to thrash out a trade deal to end the internecine trade war. One of the main items on the agenda includes bridging the gap between China’s intellectual property practices and US expectations. The US and China need to reach a deal before March 02nd to avoid the next rounds of tariff hikes from taking effect.
It is now the shadow of the strife in Venezuela that is taking its toll on crude oil prices. Brent crude closed another 54 basis points higher at $61.65/bbl on Wednesday on the back of the US imposing sanctions on Venezuela. The US had imposed sanctions on $11 billion of Venezuelan oil imports in protest against the continuation of the Maduro regime. US supply also showed signs of tapering at higher levels. OPEC has also kept its supply taps slowed. Interestingly, China and Russia are positioned on the opposite sides of the spectrum on the political stability issue in Venezuela.
ICRA sees higher liquidity compressing bond spreads over G-Secs in India. The rating agency sees the yield spread between the corporate bonds and the benchmark government 10-year bonds narrowing and reducing the relative risk of corporate bonds. The spread is already at an all-time high and is likely to reduce as the rush for government bonds will reduce considering the heavy borrowing program of the government post the budget. As the yield narrows, there may be a preference for investors and traders to prefer the safety of G-Sec bonds over corporate bonds.
It may come as a kind of a shock for Chanda Kochhar and for the banking community at large. The Srikrishna Commission finds a violation of internal guidelines by Chanda Kochhar in the grant of loans to the Videocon Group. It was reported by Reuters that the board of ICICI Bank announced that Justice Srikrishna Commission had found the actions of Chanda Kochhar a violation of the internal code of conduct. The board also withdrew all her financial entitlements including bonuses received between the years 2009 and 2018 and unexercised stop options. Chanda’s husband Deepak Kochhar was also involved in the entire issue. As per rough calculations, Chanda Kochhar will have to repay Rs.10 crore she earned as bonuses and nearly Rs.340 crore which is the value of ESOPs vested on her.
The Department of Industrial Promotion and Policy (DIPP) has given its nod for new Ecommerce Policy in India. The commerce minister, Suresh Prabhu, has confirmed that the new Ecommerce Policy should be announced very soon. WTO had raised some objections to the restrictions on foreign ecommerce players but the Indian government has decided to go ahead and protect the interests of Indian traders. The new policy is expected to smooth a complex environment and also remove restrictions. It is high time that India has a dedicated policy approach to ecommerce and to Fintech.
