“In the long run, the U.S. establishment must take corrective measures, as a failed or significantly undersubscribed Treasury auction would represent a severe shock to global financial markets. Such an event could precipitate a crisis of confidence in U.S. government debt, potentially leading to sharp increases in borrowing costs across the economy and rapid asset repricing in equity and corporate debt markets,” Vakil said in a note.
Last week, Indian equity markets experienced a significant rally, easing geopolitical tensions and upbeat global cues. The U.S. stock market experienced a strong rebound, recovering much of the ground lost during the April tariff-induced selloff. The BSE benchmark Sensex and NSE Nifty rallied more than 4% last week, backed by strong broader markets. The Nifty Midcap100, Smallcap100, and Microcap250 indices outperformed the Nifty by soaring 7.21%, 9.17%, and 9.99%, respectively.
On the other hand, all three major U.S. indices ended on a positive note during the week ended March 16. The Dow Jones Industrial Average,
the S&P 500, and Nasdaq Composite rose in the range of 2-3% last week. Most U.S. stocks’ weekly gains came following trade negotiations between the world’s two largest economies. U.S. and Chinese negotiators agreed to sharply reduce rates for many recently introduced tariffs for 90 days while pursuing further talks that could result in a longer-term agreement.