Macro Roundup (Apr 29)

SHANGHAI, Apr 29 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The U.S. dollar reversed gains to move lower on Wednesday following the latest policy statement from the Federal Reserve.

The Federal Reserve on Wednesday kept its easy money policy in place despite an economy that it acknowledged is accelerating.

As expected, the U.S. central bank decided to keep short-term interest rates anchored near zero as it buys at least $120 billion of bonds each month. The latter part of policy is a two-pronged effort to support an economy that grew strongly to start 2021 as well as to support market functioning at a time when 30-year mortgages still go for around 3%.

Despite noting the economic strength as well as inflation that is on the rise, if just temporarily, the policymaking Federal Open Market Committee unanimously decided to make no changes in its approach and gave no indications that things will change anytime soon.

Fed Chairman Jerome Powell said the recovery is “uneven and far from complete.” While he noted that inflation pressures could rise in the coming months, these “one-time increases in prices are likely to only have transitory effects on inflation.”

Powell added that it’s still not time to talk about reducing policy accommodation, including the asset purchases.

On Wall Street, the major averages closed in the red during normal trading. The Dow slid 165 points for a loss of 0.48%. The S&P 500 hit a record high but couldn’t hold onto those gains and closed 0.08% lower. The Nasdaq Composite declined 0.28%.

Oil prices rose nearly 2% on Wednesday, after U.S. distillate inventories posted a large drawdown and refining activity picked up, boosting hopes for rising fuel demand.

The market remained concerned, however, about India’s surging coronavirus cases.

Brent crude futures rose 1.28%, or 85 cents, to settle at $67.27 per barrel. U.S. West Texas Intermediate (WTI) crude futures settled 1.46%, or 92 cents, higher at $63.86 per barrel.

U.S. crude inventories rose by 90,000 barrels last week to 493.1 million barrels, the Energy Information Administration said on Wednesday. Analysts had expected a 659,000-barrel rise.

Distillate stockpiles fell by 3.3 million barrels in the week, and refining capacity use rose to 85.4% on the week.

Gold prices gained on Wednesday, as the dollar and U.S. Treasury yields eased after the U.S. Federal Reserve kept interest rates unchanged and re-affirmed its accommodative policy to support the economic recovery.

Spot gold rose 0.2% to $1,780.56 per ounce, having earlier dipped to its lowest since April 16 at $1,762. U.S. gold futures settled down 0.3% at $1,773.9.

Economic data released Thursday will give investors an update on the progress of the economic recovery. Initial jobless claims numbers will be released, with economists surveyed by Dow Jones expecting a print of 528,000. Pending home sales figures will also be released.