Macro Roundup (Mar 4)

SHANGHAI, Mar 4 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The safe-haven US dollar remained broadly weaker on Wednesday as Treasury yields continued to retreat, restoring some calm to global markets and reigniting demand for riskier assets.

Commodity-linked currencies including the Australian dollar and the Norwegian krone held on to sizeable two-day advances.

The lower U.S. yields also sapped some of the dollar’s allure among fellow low-yielding currencies, with the yen and Swiss franc bouncing off multi-month lows.

Bonds have been at the center of a storm in financial markets in recent weeks, following a dramatic jump in yields globally – but led by Treasuries – in defiance of central bankers’ insistence on patience in normalizing monetary policy as economies recover from the COVID-19 pandemic. Global stocks were knocked from near record highs, and commodities prices wobbled.

Fiscal stimulus has fueled market expectations for a rapid recovery, with President Joe Biden close to passing a $1.9 trillion spending package.

An index of the dollar against six of its major peers was little changed early in the Asian session Wednesday, after dropping back from a nearly one-month high overnight.

On Wall Street, US stock index futures slid during overnight trading on Wednesday, accelerating losses from the regular trading session which saw the major averages finish in the red across the board.

Futures contracts tied to the Dow Jones Industrial Average dropped 130 points. S&P 500 futures and Nasdaq 100 futures declined 0.57% and 0.75%, respectively.

Stocks posted heavy losses during regular trading as rising bond yields spooked investors. The S&P 500 dipped 1.3%, while the Dow Jones Industrial Average closed 119 points, or 0.38%, lower. The Nasdaq Composite was the relative underperformer, falling 2.7% as tech names declined. The index is on track to post its third straight negative week — the longest weekly losing streak since September.

The weakness came as the 10-year Treasury yield extended gains. The benchmark rate climbed to a high of 1.49% on Wednesday before retreating slightly. Last week, the yield surged to a high of 1.6% in a move that some described as a “flash” spike.

Oil prices rose more than 2% on Wednesday, boosted by a huge drop in U.S. fuel inventories and expectations that OPEC+ producers might decide against increasing output when they meet this week.

US gasoline stocks fell last week by the most on record and refining output fell to a record low in the wake of a deep freeze in Texas that shut production.

Gasoline inventories fell to 243.5 million barrels, the U.S. Energy Information Administration said, while distillate stockpiles fell by the most since 2003 to 143 million barrels.

“This drop is 100% based upon the storm in Texas,” said John Kilduff, partner at Again Capital Markets in New York. “It froze up the entire Texas supply chain and caused a drawdown on available refined product stores.”

Gold slid more than 2% to its lowest in nearly nine months on Wednesday as elevated US Treasury yields and a stronger dollar hammered the metal’s appeal.

Spot gold was down 1.2% at $1,717.67 per ounce, after falling to its lowest since June 2020 at $1,701.40 earlier in the session.

US gold futures settled 1% down at $1,715.80.

“As real rates continue to rise, that’s challenging gold. The rates markets are also adding pressure on valuations for all asset classes, and as a result, gold is a casualty,” said TD Securities commodity strategist Daniel Ghali.

Benchmark US 10-year Treasury yields crept back towards a one-year peak reached last week, while the dollar rose.

Euro zone monthly retail sales rate, Euro zone, Euro zone unemployment rate, number of layoffs in US challenger enterprises, monthly rate of US durable goods orders and monthly rate of US factory orders will be released today.