Union Cabinet Sanctions Palm Oil Scheme for 5 Years

To reduce import dependence on edible oil, the Union Cabinet of India has approved a new palm oil scheme for the next 5 years. This will cost the exchequer around Rs 110.4 billion, of which Rs 88.44 billion will be Centre's share and Rs 21.96 will be States’ share. Further, the scheme intends to increase palm oil productivity by covering an additional 0.65 million hectares under oil palm till 2025- 26, thereby reaching the target of 1 million hectares. 

Japan’s CPI inflation fell by 0.3 per cent in July 2021 on a year-on-year basis versus a decline of 0.5 per cent in June 2021. The decline was led by transport and communication (-5.4%), medical care (-0.5 per cent), and food (-0.6 per cent). Further, while prices of goods increased by 0.8 per cent in July 2021, prices of services fell by 1.5 per cent. Core CPI (excluding fresh food) fell by 0.2 per cent in July 2021 on a year-on-year basis, marking the twelfth straight month of decline. In June 2021, core CPI had declined by 0.4 per cent.  

US FOMC minutes showed that members are willing to begin reducing the asset purchase program in CY21 if the economic recovery continues. Key risks to growth from the rapid spread of new Delta variants and supply chain bottlenecks impacting businesses were also highlighted. Officials also pointed out that the inflation trajectory was satisfying and unemployment goals are also on track. Separately, US initial jobless claims fell by 29,000 to 348,000 (estimated 365,000) in the week ended 14 Aug 2021. This is the lowest level since 14 March 2020 (256,000). 

Bonds: Except for Japan (stable), global yields closed lower amidst concerns over the spread of the Delta variant. UK's 10Y yield fell the most by 3bps followed by the US, Germany, and China's 10Y yield which fell by 1bps each. Investors also await Fed Chair's comment on the economic outlook in the upcoming Jackson Hole symposium. India's 10Y yield is trading at 6.23 per cent today, ahead of MPC minutes. 

Currency: Global currencies closed mixed. DXY rose by 0.4 per cent to its highest since November 2020 amidst increased expectations that the Fed will taper its asset purchase programme this year. AUD fell the most by 1.2 per cent. JPY closed flat. However, rupee rose by 0.1 per cent supported by lower oil prices. It is trading lower today in line with other Asian currencies. 

Equity: Global markets closed lower with FTSE (-1.5 per cent), DAX (-1.3 per cent), and Nikkei (-1.1 per cent) falling the most. Investor sentiments were impacted by FOMC minutes which indicated that Fed tapering may begin in CY21 itself. Dow fell by 0.2 per cent. Indian markets were closed. Following global cues, Sensex opened lower today, in line with other Asian stocks.