Macro Roundup (Sep 19)

SHANGHAI, Sep 19 (SMM) – This is a roundup of global macroeconomic news last night and what is expected today.

Last night

The US dollar strengthened on Wednesday after the Federal Reserve cut interest rates as expected, but failed to signal more easing in 2019.

The US central bank cut the overnight rate by 25 basis points to a range of 1.75% to 2%, as was widely expected. This is the second time this year the Fed has lowered rates.

LME base metals closed mixed on Wednesday. Lead rose 1.1%, nickel advanced 0.9%, and tin inched up 0.06%, while aluminium dipped 0.06%, copper fell 0.2%, and zinc shed 1%.

SHFE base metals performed similarly overnight. Nickel gained 0.7%, and lead climbed close to 0.5%, while tin edged down 0.01%, copper slipped 0.4%, aluminium lost 0.5%, and zinc declined 0.6%.

Oil prices retreated on Wednesday, extending the decline in the previous session after US President Donald Trump said he ordered the Treasury Department to “substantially increase” sanctions on Iran.

The latest comment from the president marks a softening in his rhetoric as he had warned on Sunday that the US was “locked and loaded” to respond to the Saudi incident.

On the data front, US crude inventories increased by 1.1 million barrels in the week ending September 13, after four weeks of drawdowns, according to the Energy Information Administration (EIA). Analysts expected a decrease of 2.5 million barrels.

Gasoline stocks rose by 781,000 barrels, compared with analysts’ expectations for a 538,000-barrel drop. Distillate stockpiles, which include diesel and heating oil, rose by 437,000 barrels, versus expectations for a 535,000-barrel increase, the EIA data showed.

US homebuilding surged to more than a 12-year high in August as both single- and multi-family housing construction increased, suggesting that lower mortgage rates were finally providing a boost to the struggling housing market.

The report from the Commerce Department on Wednesday also showed permits for future home construction rose to levels last seen in 2007.

Housing starts jumped 12.3% to a seasonally adjusted annual rate of 1.364 million units last month, the highest level since June 2007, the Commerce Department said on Wednesday.

In the eurozone, annual inflation held steady at 1% in the year to August, in line with analyst expectations. On a monthly basis, consumer price index (CPI) rose 0.1% which was a tick lower than expected. Core CPI rose 0.9% annually and 0.2% monthly, both meeting the analyst estimate.

Day ahead

The Bank of Japan is set to announce its interest rate decision and monetary policy statement later today.

Economic data slated for release today include US weekly jobless claims, current account for the second quarter, and existing home sales in August.