Macro Roundup (Jun 21)

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

The dollar extended its advance against a basket of currencies on Friday, building on the gains logged after the US Federal Reserve earlier this week surprised markets by signaling it would raise interest rates and end emergency bond-buying sooner than expected.

The dollar index, which tracks the greenback against six major currencies, was up 0.43% at 92.28, its highest since mid-April. That puts the index on pace for a weekly gain of nearly 2%, its best weekly jump in about 14 months.

The jolt to foreign exchanges was triggered on Wednesday by Fed forecasts showing 13 of the 18-person policy board saw rates rising in 2023, versus only six previously, with the median board member tipping two hikes in 2023.

Investors’ risk appetite took another hit after St. Louis Federal Reserve President James Bullard said on Friday that the US central bank’s shift this week toward a faster tightening of monetary policy was a “natural” response to economic growth and particularly inflation moving quicker than expected as the country reopens from the coronavirus pandemic.

On Wall Street, stock futures are mostly flat on Sunday to kick off a new week of trading after the Dow posted its worst week since October.

Futures on the Dow Jones Industrial Average shed 8 points, or 0.02%. S&P 500 futures dipped 0.08%. Meanwhile, Nasdaq 100 futures edged 0.02% higher.

The Fed on Wednesday raised its inflation expectations and forecast rate hikes in 2023. St. Louis Fed President Jim Bullard said Friday on CNBC’s “Squawk Box” that it was natural for the central bank to tilt a little more “hawkish” and saw higher interest rates as soon as 2022.

The Dow dropped 3.5% last week, while the S&P 500 and Nasdaq dipped 1.9% and 0.2%, respectively, on the week.

Oil futures reversed earlier loses on Friday after OPEC sources said the producer group expected limited US oil output growth this year despite rising prices.

Officials at the Organization of the Petroleum Exporting Countries got the US production outlook from industry experts, OPEC sources said. This would give the producer group more power to manage the market in the short term before a potential surge in shale output in 2022.

Brent crude futures rose 39 cents, or 0.53% to $73.47 a barrel by 2:53 p.m. ET.

US West Texas Intermediate (WTI) crude futures settled at $71.64 per barrel, up 0.8%.

Gold struggled for traction in choppy trading on Friday en route to its worst week in over a year as the dollar extended its rally on the back of the US Federal Reserve’s hawkish outlook.

Spot gold edged 0.17% lower to $1,770.36 per ounce around 3:00 p.m. ET, stalling an initial uptick on some bargain buying.

US gold futures settled 0.3% down at $1,769.90 an ounce.

Palladium was last down 1.94% at $2,462.18, while silver fell 0.23% to $25.86 and platinum dropped 1.94% to $1,037.53.

On the data front, May’s U.K. retail sales fell 1.4% month on month, official statistics revealed Friday, falling short of the 1.6% expansion expected by economists in a Reuters poll. The Office for National Statistics said food stores contributed most prominently to the surprise decline. The pound tumbled to a new six-week low on the back of the dip.

Meanwhile, the German Producer Price Index (PPI) rose 1.5% month on month in May, vastly outstripping the 0.7% consensus forecast. On an annual basis, the PPI was 7.2% against a projection of 6.4%.