Economics · Macroeconomic Linkages and Market Dynamics

Consider the comprehensive statements detailing the global and domestic macroeconomic linkages that define financial market dynamics: 1. A hawkish US Federal Reserve stance strengthens the US Dollar, creating emerging market capital outflows and currency depreciation pressure on the Indian Rupee. 2. Rising global crude oil prices widen India's current account deficit and drive inflation via transportation costs, causing domestic bond yields to rise. 3. The inclusion of Indian government bonds in global indices increases foreign institutional participation, raising market liquidity along with volatility related to global risk sentiment. 4. Fiscal consolidation by the government lowers the supply pressure on government bonds, which can moderate long-term yields and flatten the yield curve. 5. When credit growth significantly outpaces deposit growth, market-driven mechanisms force banks to raise deposit and lending rates even without an official RBI repo rate hike. 6. Foreign exchange reserves provide an external shock buffer for the RBI, though holding them involves a trade-off due to low-yielding foreign sovereign investment carry costs. 7. Interlinkage between equity and corporate bond markets causes rebalancing, where rising bond yields shift retail/institutional allocation back to fixed income from equities. Which of the following assessments regarding the validity of these statements is correct?