Macro Roundup (Mar 8)

SHANGHAI, Mar 8 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar held firmly near three-month highs on Friday after surging overnight as Federal Reserve Chair Jerome Powell stuck with dovish rhetoric despite a recent spike in bond market volatility.

The US currency soared the most in a month after Powell said the violent sell-off in Treasuries last week was “notable and caught my attention” but was not “disorderly” or likely to push long-term rates so high the Fed might have to intervene more forcefully.

Instead, he reiterated a commitment to maintain ultra-easy monetary policy until the economy is “very far along the road to recovery.”

Powell’s remarks reignited selling in Treasuries, with the benchmark 10-year Treasury yield jumping back above 1.5% and rising as high as 1.5830% in Asia. Last week, it had soared to a three-month top of 1.614%.

Riskier currencies including the Australian and New Zealand dollars slid along with stocks as investor sentiment again turned sour.

On Wall Street, Dow futures rose on Sunday evening as a new stimulus package from Washington headed toward final passage this week.

Futures contracts tied to the Dow Jones Industrial Average added 72 points, or 0.2%. Those for the S&P 500 were nearly flat, while those for Nasdaq 100 shed 0.3%, signaling that a recent underperformance by tech stocks may continue on Monday.

The move in futures came after the Senate passed a $1.9 trillion economic relief and stimulus bill on Saturday, paving the way for extensions to unemployment benefits, another round of stimulus checks and aid to state and local governments. The Democrat-controlled House is expected to pass the bill later this week. President Joe Biden is expected to sign it into law before unemployment aid programs expire on March 14.

Oil prices jumped about 3% on Friday, hitting their highest levels in more than a year, following a stronger-than-expected U.S. jobs report and a decision by OPEC and its allies not to increase supply in April.

Brent futures rose $2.62, or 3.9%, to settle at $69.36 a barrel. The session high for the global benchmark was its highest since January 2020.

West Texas Intermediate (WTI) crude rose $2.26, or 3.5% to settle at $66.09 a barrel.

For the week, Brent was up 5.2%, rising for a seventh week in a row for the first time since December, while WTI was up about 7.4% after gaining almost 4% last week.

Both contracts surged more than 4% on Thursday after the Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, extended oil output curbs into April, granting small exemptions to Russia and Kazakhstan.

Gold fell to its lowest in nine months on Friday after better-than-expected U.S. employment data bolstered the dollar and U.S. Treasury yields, putting bullion on course for its third straight weekly decline.

Spot gold was down 0.1% at $1,695.22, after falling to its lowest since June 8 at $1,686.40 in the session. It has fallen nearly 2% this week. U.S. gold futures slipped 0.4% to $1,693.10.

“This optimism in regards to the economy moving forward continues to drive bond yields higher and that certainly has been taking the wind out of the sails of many commodity markets, including gold,” said David Meger, director of metals trading at High Ridge Futures.

Data showed US jobs increased more than expected in February, raising hopes around a quick economic rebound driven by massive fiscal stimulus and vaccination drives. The strong economic data lifted benchmark 10-year Treasury yields to their highest since February 2020, while the dollar also jumped.

Key economic data slated for release today include Germany January seasonally-adjusted industrial output monthly rate, China social financing scale in February, Eurozone Sentix Investor Confidence Index for March and final value of US monthly wholesale inventory rate in January.