Urjit Patel, governor of the Reserve Bank of India (RBI), attends a news conference in Mumbai, India, on Thursday, April 6, 2017.

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India’s surprise rate hike is already being labeled a policy error, the G-7 summit is set to kick off amid a `family quarrel,’ and the S&P 500 is nearing record territory once again. Here are some of the things people in markets are talking about.

India’s `Policy Error’

India’s surprise decision to join EM peers including Indonesia, Turkey and Argentina in raising interest rates is likely to hurt the nation’s growth recovery and turn out to be a one-and-done policy error, according to Bloomberg Economics economist Abhishek Gupta. Analysts broadly said the decision to retain a neutral stance will help cushion the impact on the nation’s bond market. The Reserve Bank of India’s first hike since 2014 comes as economic growth rebounds from a four-year low and price pressures build, while policy tightening in the U.S. continues to rattle emerging markets.

G-7 Begins Amid ‘Family Quarrel’

The G-7 conference begins on Friday amid heightened trade tensions between the U.S. and its allies. Donald Trump’s top economic adviser, Larry Kudlow, characterized the current state of affairs as “a family quarrel,” and said Trump will meet one-on-one with Canadian Prime Minister Justin Trudeau and French President Emmanuel Macron at the summit. Finance ministers from the six other nations participating issued a rare public rebuke during a preliminary meeting last week, saying they would retaliate against Trump’s decision to impose duties on steel and aluminum imports from the European Union, Canada, and Mexico. The criticism has been particularly acute from Trudeau, the summit’s host, who called the tariffs “insulting.”

Nasdaq Sets Another Record, S&P 500 Close Behind

The S&P 500 pushed higher for a fourth consecutive day, led by gains in financials and health care companies, to close about 100 points off its all-time high. The Dow Jones Industrial Average climbed the most in almost two months. The Nasdaq Composite Index reached another record, pushing its return for the year beyond 11 percent. Treasuries were near their session lows into the close as the front-end marginally outperformed. The Stoxx Europe 600 Index finished little changed as a strengthening euro provided a headwind and as Italian shares fell. Both were reacting to signs that the ECB is ready to discuss an end to quantitative easing, which sank bonds in the region and spurred fears for Italy’s embattled lenders.

Worst Yet to Come for China Banks

China’s banks have managed to sidestep the severest curbs on their shadow banking activity, suggesting the real pain of the deleveraging process lies ahead, according to a report by UBS Group AG. A squeeze on their interbank borrowing was mitigated through extensive use of a short-term funding instrument called negotiable certificates of deposit, the report by UBS analysts led by Jason Bedford said. Regulators have clamped down on interbank activity because some banks had used it to boost shadow loans and add leverage. NCDs issued by banks grew by 1.5 trillion yuan ($235 billion) in 2017, offsetting the 1.3 trillion yuan decline in interbank borrowing, according to UBS, which compiled the data from regulatory filings. This helps explain why the credit tightening that started in early 2017 hasn’t proved more painful for the banking sector.

Indonesia’s Message for the Fed

Indonesia’s new central bank chief joined his counterpart in India in calling on the Federal Reserve to be more mindful of the global repercussions of policy tightening amid a rout in emerging markets. In his first interview with international media since he took office two weeks ago, Bank Indonesia Governor Perry Warjiyo said the pace of the Fed’s balance sheet reduction was a key issue for central bankers across emerging markets. Reserve Bank of India Governor Urjit Patel made similar comments earlier this week, arguing that slowing the pace of stimulus withdrawal would support global growth.

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