Macro Roundup (May 14)

SHANGHAI, May 14 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar held steady near week highs on Thursday after the US Labor Department reported higher producer prices in April, further evidence that inflation is rising in the United States.

The producer price index rose 0.6% in April after surging 1.0% in March. In the 12 months through April, the PPI shot up 6.2%. That was the biggest year-on-year rise since the series was revamped in 2010 and followed a 4.2% jump in March.

Thursday's report follows data on Wednesday showing consumer prices increased by the most in nearly 12 years in April. The dollar rose on Wednesday to one-week highs as some investors increased bets that the Federal Reserve could raise interest rates sooner than the bank has forecast. But the move in the dollar was relatively muted, suggesting many investors continue to take Fed policymakers at their word.

On Wall Street, US stock index futures were little changed in overnight trading on Thursday, after all three major averages snapped three-day losing streaks to end the day higher.

Futures contracts tied to the Dow Jones Industrial Average were flat. S&P 500 futures advanced 0.04%, while Nasdaq 100 futures slid 0.06%.

During regular trading, the Dow advanced 434 points for a gain of 1.29%. The S&P 500 and Nasdaq Composite gained 1.22% and 0.72%, respectively.

Still, despite Thursday's strong session, the major averages are on track for hefty losses for the week as inflation fears hit sentiment.

The Dow is down 2.18% for the week, while the S&P has shed 2.84%. Tech stocks have been hit especially hard, pulling the Nasdaq down 4.56% for the week.

Oil prices fell more than 2% on Thursday as India’s coronavirus crisis deepened and a key U.S. pipeline resumed operations, halting a rally that had lifted crude to an eight-week high after the IEA and OPEC forecast a rebound in global demand later in the year.

Brent crude was 3.36%, or $2.33, at $66.99 per barrel, after rising 1% on Wednesday. West Texas Intermediate (WTI) slid $2.32, or 3.5%, to $63.74 a barrel, having risen 1.2% in the previous session.

If those losses are sustained, both contracts would mark their biggest daily drops in percentage terms since early April.

In a bearish signal for oil demand, a variant of the coronavirus has swept through the countryside in India, the world’s third-biggest importer of crude.

Medical professionals have not been able to say when new infections will plateau and other countries are alarmed over the transmissibility of the variant that is now spreading worldwide.

Gold bounced off a one-week low hit earlier on Thursday as a dip in U.S. Treasury yields bolstered the metal’s appeal as an inflation hedge.

Spot gold was up 0.5% to $1,824.89 per ounce, recovering from its lowest level since May 6 at $1,808.44. U.S. gold futures settled 0.1% higher at $1,824.

“All the inflation numbers are positively affecting gold prices and the momentum is likely to continue going forward,” said Jeffrey Sica, founder of Circle Squared Alternative Investments.

Data showed fewer Americans filed new claims for unemployment benefits last week. Meanwhile, producer prices increased more than expected in April.

This followed Wednesday’s data showing U.S. consumer prices jumped the most in nearly 12 years last month, which intensified concerns over rising inflation and possible interest rate hikes.

Key economic data slated for release today include US retail sales data for April, US April import price index, industrial production index, University of Michigan Consumer Confidence Index in May, US operating inventory and US ECRI Leading Index.