Macro Roundup (Nov 12)

SHANGHAI, Nov 12 (SMM) – This is a roundup of global macroeconomic news last weekend and what is expected today.

Last weekend

The US dollar rose against most major currencies on Friday and settled at 96.88. 

The Federal Open Market Committee (FOMC) eased concerns that the Fed would let up in its tightening of monetary policy. The Fed has hiked interest rates three times this year and is likely to hike again at the next meeting. The market remains confident in US growth even after the results of the US midterm election.

Base metals, except for SHFE tin and zinc, fell across the board as LME nickel led the losses and closed 2.97% lower. LME copper fell 1.71%, lead slid 1.7%, aluminium declined 1.31%, tin dipped 1.12%, and zinc went down slightly. SHFE nickel slumped 2.24%, lead fell 0.82%, copper lost 0.63%, and aluminium inched down. 

China's consumer price index (CPI), a main gauge of inflation, rose 2.5% year on year in October, unchanged from September, data showed on Friday. That ended four consecutive months of gains.

For the first 10 months, CPI gained 2.1% from one year earlier, well below the government's target of 3% for 2018, according to data released by the National Bureau of Statistics (NBS).

Food prices jumped 3.3% from October of last year. Prices of fresh fruits, vegetables and eggs climbed 11.5%, 10.1% and 7.8%, respectively, from a year ago. Pork prices fell 1.3% year on year, but climbed 1% from the previous month.

The producer price index (PPI), which measures costs for goods at the factory gate, rose 3.3% year on year in October, with the pace of growth slowing for a fourth month.

NBS statistician Sheng Guoqing said that the carryover effect contributed 1.2 percentage points to PPI growth, while new factors contributed 2.1 percentage points.

A high base in 2017 and continued weakness in domestic demand extended the decline in growth of PPI, said Lu Ting, an economist with Japanese financial house Nomura. Lu expected the downward trend of PPI growth to continue but in a milder manner through winter.

The US PPI in October jumped 0.6% from September, the government said Friday. The increase exceeded the expected growth of 0.2%.  

The core PPI increased by 0.5% from a month earlier and rose 2.6% from October 2017. Core PPI is a key gauge of underlying producer price pressures that excludes food and energy costs.

The University of Michigan's consumer sentiment index hit 98.3 for November. This compared with an expected 98 and October’s reading of 98.6. 

"Consumer sentiment remained virtually unchanged in early November from its October reading," Richard Curtin, chief economist for the Surveys of Consumers, said in a statement. "The stability of consumer sentiment at high levels acts to mask some important underlying shifts. Income expectations have improved and consumers anticipate continued robust growth in employment, but consumers also anticipate rising inflation and higher interest rates."

The US wholesale inventories rose more in September than estimated. As reported on Friday, the Commerce Department said that wholesale inventories rose 0.4% in September, slightly faster than its initial estimate of growth of 0.3%. As a result, inventories rose 5.2% year over year as of September.

With US job and wage growth bolstering domestic demand, businesses are expected to boost stocks of goods, which could underpin production at factories.

Day ahead

Economic data slated for release today include China’s total social financing and its M2 money supply for October.