By: Dr K C Gupta, YBB Personal Finance

SENTIMENTS

AAII Bull-Bear Spread -8.5% (below average). (Thursday-Wednesday)
$NYA50R, NYSE %Above 50-dMA 72.25% (overbought)
$SPXA50R, SP500 %Above 50-dMA 79.00% (overbought)
Delta MSI 56.9% (positive)
ICI Fund Allocations (Cumulative), 3/31/25
OEFs & ETFs: Stocks 59.32%, Hybrids 4.24%, Bonds 18.32%, M-Mkt 18.11%

INTEREST RATES

CME FedWatch
Cycle peak 5.25-5.50%
Current 4.25-4.50%
FOMC 6/18/25+ hold
FOMC 7/30/25+ hold

Treasury

T-Bills 3-mo yield 4.37%, 1-yr 4.13%; T-Notes 2-yr 3.98%, 5-yr 4.06%, 10-yr 4.43%; T-
Bonds 30-yr 4.89%;
(Moody’s US debt downgrade was after the market close on Friday, 5/16/25)
TIPS/Real yields 5-yr 1.64%, 10-yr 2.09%, 30-yr 2.59%
FRNs Index 4.347%
US Savings I-Bonds rate from 5/1/25 – 10/31/25 is 3.98% (previous 3.11%); the fixed
rate is 1.10%, the semiannual inflation is 1.43%.

For current banking rates, see www.depositaccounts.com/

Stable-Value (SV) Rates, 5/1/25
TIAA Traditional Annuity (Accumulation) Rates
Rates up by +25 bps (1st increase since 12/2023)
Restricted RC 5.50%, RA 5.25%
Flexible RCP 4.75%, SRA 4.50%, IRA-101110+ 4.75%
TSP G Fund 4.250% (previous 4.250%).
The data above are as of Sunday preceding the publication date.

MARKETS

Global markets rallied on temporary US-China trade deal while the negotiations will
continue. There are now 2 models of US trade deals – when the US has trade surplus
(US-UK trade deal) & when the US has trade deficit (US-China trade deal). Other trade
deals, including US-India, should follow soon. With the stock rebound, Indian stocks are
now relatively expensive at P/E 23; the RBI rate cut also helped.

IT/TECH

The term for India’s approach to AI is sovereign AI, or state-supported AI. A big news
from US President TRUMP’s visit to Saudi Arabia was the huge sovereign AI project
HUMAIN / PIF; most AI heavyweights were also around. Export restrictions on
advanced chips to approved countries have been relaxed & Saudi Arabia was the first
country to get this clearance. UAE also has a large sovereign AI effort.

ECONOMY

India-UK free trade agreement (FTA) will significantly reduce tariffs over multiple years.
Most tariffs will eventually be eliminated. Several areas will be opened up for UK
investments. Some tweaks are included for immigration & there are 3-yr waivers from
national insurance contributions for Indian migrant workers in the UK.

India-US trade agreement may have zero-for-zero reciprocal tariffs up to some limits for
steel, auto parts & pharma. A strategic calculation may be that the US imports in these
areas won’t be competitive with the domestic products. India-US bilateral trade is $129
billion (both imports & exports, but on a net basis, US has a trade deficit) & there are
ambitious goals of $500 billion in a few years. India has also filed complaints against the
US at WTO. Analysts are bullish on financials, healthcare, materials, consumer-staples,
electronics, IT services (goods tariffs don’t apply) & logistics that would benefit from
economic growth under India-US trade deal.

Apple/AAPL & its parts supplier Foxconn/FXCOF reiterated their commitments to
expand phone production in India despite pressure from the US for more US production.
Most R&D & some advanced manufacturing will be in the US. But it’s simply not
practical to do a lot of basic manufacturing in the US. At this stage, it’s mostly the final
assembly of iPhones in India, but that would expand gradually. Apple’s production in
China is still around 80% despite the shifts so far to India, Vietnam, etc & the shift will
take years.

SPECIAL TOPICS

India made several missile strikes on suspected terrorist targets within Pakistan on
5/7/25 (Operation Sindoor). It was a limited military response to the terrorist attack on
tourists in Pahalgam/Kashmir on 4/22/25. A premature truce was announced on 5/10/25
but some skirmishes continued with India targeting military bases/facilities in Pakistan.
No military personnel crossed borders. A hotline between the military officials of two
countries has been reactivated. An uneasy truce seems to be holding. The US
President Trump & Vice-President Vance sent contradictory signals.

Like the recent wars elsewhere, drones & missiles were prominent in these military
operations. Both India & Pakistan have good offensive capabilities for air missions but
have limited defensive capabilities. Ironically, the military experts around the world were
watching with interest how the military jets from India (Russian, French, Indian)
performed vs those from Pakistan (Chinese; notably, its old US jets weren’t used); there
was similar curiosity for drones & missile defense systems used by both countries. India also utilized domestic satellite technology for monitoring military activities; plans are to expand that capability by incentivizing private companies in addition to ISRO.

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