Trump-Xi summit, rupee, bonds and Fed speak to drive markets this week: Key events to watch

According to fresh market updates, The Trump-Xi summit on Thursday will be the key event for markets the current week, with market participants watching for developments around trade, technology and the Middle East, according to HDFC Treasury Research Desk. A series of Fed speakers following last week's rate decision and flash September PMIs for the US, Euro Area, UK and India on Wednesday will additionally be in focus. For Indian markets, the indian rupee, domestic bond yields and RBI liquidity operations are likely to stay key cues.

The Fed boosted its policy rate by 25 bps to 3.75-4.00%, its first hike in more than three years. The median policy-rate projection was revised up to 4.1% for end-2026, consistent with another 25-bps hike this year, while 16 of 18 policymakers expect at least one further gain. Markets are assigning around a 58% probability to another hike at the October meeting. US 10Y Treasury yields ended the week around 5%, while the Dollar Index moved above 100.

Brent crude eased to around $101.7 per barrel as Saudi oil exports recovered to over 4 million bpd in September from 2.4 million bpd in August. That stated, fresh Houthi attacks and uncertainty around regional shipping routes are likely to keep the risk premium elevated.

The BoJ boosted its policy rate by 25 bps to 1.25%, but the yen softened after Governor Ueda refrained from signalling a predetermined pace of further hikes. HDFC Treasury Research Desk anticipates USD/JPY in a 155-159 range, with intervention risk increasing towards 158-160. It anticipates EUR/USD in a 1.14-1.16 range.

The indian rupee ended Friday at 95.88/USD, down 0.3% over the week. Elevated crude, a stronger dollar and elevated global yields stay headwinds despite RBI intervention. HDFC Treasury Research Desk anticipates USD/INR in a 95.50-96.50 range.

The 10Y G-sec yield closed at 7.07%, up 4.5 bps over the week. HDFC Treasury Research Desk anticipates the benchmark yield in a 7.00-7.15% range. System liquidity stood at Rs 6.94 lakh crore as of September 17, while the RBI absorbed Rs 2.23 lakh crore through a VRRR and is scheduled to conduct another Rs 25,000 crore OMO sale.

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Trump-Xi Summit; Fed Speak: Williams; US jobless claims; ECB Economic Bulletin