India and the US are actively engaging in trade negotiations with a key call on January 13, aiming to resolve longstanding issues including tariffs and supply chain cooperation. Meanwhile, India's retail inflation rose slightly to 1.33% in December, still below RBI's 4% target. US markets showed mixed signals amid a DOJ investigation into Fed Chair Jerome Powell. Banking stocks face pressure amid political and regulatory developments.
Good morning and welcome to today's latest market news. We begin with updates on the global economy, focusing on the ongoing India-US trade negotiations, inflation trends, and recent developments in the US markets.
India and the United States are actively engaged in discussions to finalize a trade deal. The next round of talks is scheduled for January 13, 2026. According to Sergio Gaur, the US Ambassador to India, these talks come at a critical time after a prolonged failure to secure a trade agreement between the two countries.
Negotiations have been ongoing since February last year but have yet to yield meaningful results. Both sides have come close multiple times, but communication breakdowns have stalled progress. Reuters recently reported that a potential deal collapsed last year due to such issues.
The trade talks have been complicated by several factors, including the depreciation of the Indian rupee and US tariffs. In August last year, the US imposed a 50% tariff on Indian goods, which also included tariffs related to India's purchase of Russian oil. This move increased tariff rates significantly and added tension to the negotiations.
Despite challenges, both countries continue to engage actively across various sectors such as trade security, counter-terrorism, energy, technology, education, and health. India’s Trade Minister Piyush Goyal has reiterated India's commitment to these discussions, and Prime Minister Narendra Modi had earlier set a target to finalize a deal by late 2025.
Next month, India has been invited to participate in a US initiative called PAX SILICA, which aims to secure the silicon supply chain critical for semiconductors and AI technologies. This initiative reflects the strategic importance of cooperation in critical minerals and technology sectors.
The recent rally in US markets has stalled slightly. On the latest trading day, the Dow Jones Industrial Average fell by 0.1%, while the Nasdaq Composite remained flat.
A significant development is the Department of Justice opening a criminal investigation into Federal Reserve Chair Jerome Powell. The investigation concerns his testimony related to office renovations. Powell released an unusual video statement asserting that prosecutors are investigating his testimony and that this probe is an attempt to influence monetary policy.
Powell emphasized that he would not succumb to political pressure, noting the ongoing political tactics used against him, especially from former President Donald Trump, who opposes Powell's continuation as Fed Chair.
Bank stocks continue to decline amid these political and regulatory pressures. Last week, Trump proposed capping credit card interest rates at 10%, which led to a drop in banking stocks. Critics argue that such caps could restrict lending, hurt consumers, and significantly dent banks' profitability.
Despite aggressive rate cuts, bond yields have not decreased, indicating that the market perceives US bond risk as higher than before. This suggests that even the US President cannot influence bond yields, which remain a key indicator of market risk perception.
India's retail inflation rose for the second consecutive month to 1.33% in December 2025, compared to 0.71% in November 2025. Although this is an increase, it remains well below the Reserve Bank of India's mid-term target of 4%.
The inflation figures compare December 2025 with December 2024, indicating a moderate rise but not a significant inflationary pressure. This suggests that while inflation is increasing, it is still under control relative to RBI's targets.
The coming days will be crucial in determining whether the India-US trade talks yield a meaningful agreement and how US political and economic developments will impact global markets.
This concludes today's market news update. Stay tuned for further developments.
