Macro Roundup (Sep 21)

SHANGHAI, Sep 21 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar was on track for its fifth straight day of declines against the yen, which was at a seven-week high against the greenback on Friday as investors sought Japan’s safe-haven currency due to monetary policy, US election uncertainty and the latest US-China political tensions.

While the dollar was up against a basket of currencies it was on track for a weekly decline after two weeks of gains. Aside from political uncertainty Boris Schlossberg, managing director of FX strategy at BK Asset Management said Japan’s policy of yield curve control was also a factor as it was pushing up real interest rates. While US equities have kept close to their record highs, Schlossberg said dollar weakness may signal more volatility to come ahead of the Nov. 3 US elections where President Donald Trump with face-off with Democrat challenger Joe Biden.

Schlossberg also pointed to a Trump administration plan to ban WeChat and video-sharing app TikTok from US app stores starting Sunday night, blocking Americans from the Chinese-owned platforms over national security concerns.

Oil prices were mixed on Friday after a Libyan commander said a blockade on the country’s oil exports would be lifted for a month, while a declining US equities market also weighed on futures.

Still, both the US and Brent crude benchmarks were set for weekly gains after Saudi Arabia pressed allies to stick to production quotas, Hurricane Sally cut US production, and banks including Goldman Sachs predicted a supply deficit.

In the Gulf of Mexico, US producers started rebooting rigs following a five-day closure due to Hurricane Sally. The US oil rig count, an early indicator of future output, fell by one last week to 179, its lowest since mid-August, energy services firm Baker Hughes Co said.

On Wall Street, US stock futures were little changed on Sunday night as the market tried to bounce back from its longest weekly losing streak in about a year.

The S&P 500, Dow Jones Industrial Average and Nasdaq Composite all fell for a third straight week. That marks the market’s longest weekly slide since 2019. Those declines came as tech shares — which led the broader market off its coronavirus lows and into record territory — struggled. Facebook, Amazon, Apple, Netflix, Google-parent Alphabet and Microsoft all posted steep weekly losses. The S&P 500 tech sector pulled back by 1%.

Cases of Covid-19 have now passed 30 million worldwide, resulting in more than 946,000 deaths. The World Health Organization warned on Thursday of a “very serious situation” arising in Europe as cases rise significantly across the continent, forcing a reimplementation of lockdown measures in certain regions. Economists suggested that the resurgences in coronavirus cases pose the biggest threat to the euro zone’s economic recovery, with growth and inflation more likely to present negative surprises than positive ones in the coming year.

On the data front, British retail sales rose by 0.8% in August, continuing a steady incline and slightly outpacing average economist expectations, according to official figures released Friday.

The University of Michigan said the preliminary reading of its US consumer sentiment index in September was 78.9, up from 74.1 in the prior month. The sentiment indicator covers how consumers view their personal finances as well as business and buying conditions.

The US current-account deficit, a measure of the nation's debt to other countries, widened sharply in the second quarter. The current-account deficit widened to $170 billion from a revised $111.5 billion in the first quarter. This is a 52.9% increase. The large widening reflected an expanded deficit of goods and reduced surpluses on primary income and on services, the government said. The current account reveals if a country is a net lender or debtor. The current account deficit was equal to 3.5% of GDP in the second quarter, up from 2.1% in the prior quarter. The current-account deficit peaked in 2005 at 6.3%.

China’s one-year and five-year Loan Prime Rate (LPR) are set to be out at around 9:30 a.m. HK/SIN on Monday.