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Macro Roundup (May 11)

iconMay 11, 2021 09:00
Source:SMM
The dollar languished at around 2-1/2 month lows on Monday as investors bet that rising inflation would erode the currency's value as the U.S. Federal Reserve maintains its loose monetary policy.

SHANGHAI, May 10 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar languished at around 2-1/2 month lows on Monday as investors bet that rising inflation would erode the currency's value as the U.S. Federal Reserve maintains its loose monetary policy.

The five-year breakeven inflation rate - which measures expectations of inflation five years out - reached its highest since April 2011 on Monday. The 10-year breakeven inflation rate - a measure of expectations of inflation in 10 years time - rose to its highest since March 2013.

A weaker-than-expected jobs report on Friday helped persuade market participants that the Fed would keep rates low and continue purchasing assets, even if inflation rises. The United States created a little more than a quarter of the jobs that economists had forecast last month and the unemployment rate unexpectedly ticked higher.

On Wall Street, Nasdaq futures slipped Monday evening after investors punished Big Tech equities during the regular session and pushed both the Dow Jones Industrial Average and the S&P 500 off record levels.

S&P 500 futures traded flat, while those tied to the Dow rose about 35 points. Nasdaq 100 futures came under pressure and retreated 0.2%.

Big Tech got clobbered on Monday as investors exited stocks like Apple and Microsoft, pushing the Dow Jones Industrial Average and the S&P 500 off their record highs. Both of those stocks lost at least 2% to start the week.

Futures for fuel prices moved slightly higher, but well off their highs earlier in the session as the owner of the pipeline taken down by a cyberattack said it is beginning to bring services back online through a phased approach.

Futures hit their highest level in nearly three years at one point during overnight trading as traders assessed the impact on the largest pipeline carrying fuel from the Gulf Coast to the Northeast.

The owner, Colonial Pipeline, said on Monday midday New York time that it was using a phased approach to restore the pipeline. The company added its “plan is based on a number of factors with safety and compliance driving our operational decisions, and the goal of substantially restoring operational service by the end of the week.”

Gasoline futures ended the day 0.31% higher at $2.1334 per gallon. At one point in the overnight session, gasoline futures jumped as high as $2.217, levels not seen since May 2018. The contract also spent some of Monday’s session in the red.

Gold held firm near a three-month high on Monday after last week’s miss on the US jobs growth numbers weighed on the dollar and bolstered expectations that interest rates will remain low.

Spot gold rose 0.4% to $1,836.89 per ounce, after touching its highest since Feb. 11 at $1,845.06. US gold futures settled 0.3% higher at $1,837.60.

“The disappointing U.S. job number ultimately catalyzed a round of algorithmic short-covering,” said TD Securities commodity strategist Daniel Ghali.

Also supporting the precious metal was the return of discretionary capital flowing into gold alongside strong physical demand from China and India last month prior to Indian lockdowns, Ghali added.

US nonfarm payrolls data on Friday showed jobs growth unexpectedly slowed in April, pushing the dollar to an over two-month trough, making gold less expensive for holders of other currencies.

China's April CPI annual rate, Eurozone ZEW economic prosperity index in May, Germany's ZEW Economic Climate Index in May and US JOLTs job vacancy in March will be released today.

Macroeconomics

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