Macro Roundup (Jan 19)

SHANGHAI, Jan 19 —This is a roundup of global macroeconomic news last night and what is expected today.

The yen dropped against major currencies on Wednesday after the Bank of Japan maintained ultra-low interest rates, although it recovered some ground on expectations for tighter policy in the coming months.

The central bank stunned the market in December by raising its cap on the 10-year yield to 0.5% from 0.25%, doubling the band it would permit above or below its target of zero. Since then, speculation has swirled that the BOJ could tweak its yield curve control (YCC) policy further or even scrap it.

At a two-day policy meeting, the BOJ kept intact its YCC targets, set at -0.1% for short-term interest rates and around 0% for the 10-year yield, by a unanimous vote. It also made no change to its guidance that allows the 10-year bond yield to move 50 basis points either side of its 0% target.

The yen was broadly weaker, although analysts said the BOJ was likely to tighten policy soon and the currency walked back some of its losses.

The dollar rose as much as 2.7% to 131.58 yen before gains were pared. It was last up 0.5% at 128.78 yen.

Stock futures were flat Wednesday night as investors awaited economic data and speeches from Federal Reserve leaders

Futures tied to the Dow Jones Industrial Average fell 9 points, or 0.03%. S&P 500 futures and Nasdaq 100 futures ticked up 0.03% and 0.05%, respectively.

The moves come after stocks dropped in regular trading. The S&P 500 tumbled 1.56% for its worst day since Dec. 15. The Dow shed more than 613 points, or 1.81%. The tech-heavy Nasdaq Composite fell 1.24%, snapping seven-straight days of gains. Bank stocks such as JPMorgan, Bank of America and Wells Fargo slid, weighing on the broader market.

Disappointing retail sales and a weaker-than-expected producer price index reading ignited recession fears, sending stocks lower. The 10-year U.S. Treasury yield fell to the lowest level since September.

Oil prices fell about 1% on Wednesday, surrendering early gains as worries about a possible U.S. recession outweighed optimism that China’s lifting of COVID-19 curbs will fuel demand for crude in the world’s top oil importer.

Brent futures fell 94 cents, or 1.1%, to settle at $84.98 a barrel. U.S. West Texas Intermediate (WTI) crude fell 70 cents, or 0.9%, to settle at 79.48.

The session high for both benchmarks was the highest since Dec. 5. For WTI, Wednesday was the first time in nine sessions that the contract settled down.

Gold prices turned negative on Wednesday, erasing gains made on weak U.S. economic data yet staying above the $1,900 level, as key members of the Federal Reserve signaled their intent to keep pushing interest rates higher to combat inflation.

The dollar pared losses from near multi-month lows and held steady, making gold less attractive for other currency holders.

Spot gold fell 0.2% to $1,904.84 per ounce by 1:45 p.m. ET, after hitting a session low of $1,896.32 earlier.

European markets closed cautiously higher Wednesday as uncertainty persisted on the economic outlook, a topic high on the agenda at the World Economic Forum in Davos this week.

The pan-European Stoxx 600 index closed 0.2% higher provisionally, with basic resources climbing 2.3% to lead gains while food and beverage stocks fell 1.4%.