Macro Roundup (May 13)

SHANGHAI, May 13 (SMM) – This is a roundup of global macroeconomic news over the weekend and what is expected in the day ahead.

The US dollar fell on Tuesday as the US Federal Reserve started its long-anticipated program to buy corporate bonds and the exchange traded funds that track them, but declines were kept in check by growing fears of a second wave of infections.

US stock futures moved lower in overnight trading and pointed to losses at the open on Wednesday, after a sharp sell-off in the previous session. Stocks on Wall Street fell on Tuesday, after spending much of the session around the flatline.

Oil futures rose on Tuesday, boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June to help drain the glut in the global market that has grown as the coronavirus pandemic crushed fuel demand.

Saudi Arabia said Monday it would cut production by a further 1 million barrels per day (bpd) in June, slashing its total production to 7.5 million bpd, down nearly 40% from April.

The American Petroleum Institute (API) on Tuesday reported an increase of 7.58 million barrels of crude oil in the US crude oil inventories for the week ending May 8.

For the previous week ending May 1, the API reported an increase of 8.4 million barrels of crude oil inventories while the US Energy Information Administration (EIA) reported a rise of 4.6 million barrels. The EIA will release its weekly crude inventory data on Wednesday.

LME base metals eased across the board on Wednesday morning, extending their losses from the previous session. On Tuesday, lead pulled back 2.7% to lead the way down, zinc retreated more than 2%, aluminium fell 1.1%, nickel and copper shed about 1%, and tin edged down 0.03%.

On the SHFE, lead was also the biggest loser in overnight trading, shedding 1.3%. Aluminium and zinc dropped 1.2%, copper slid 0.7%, tin fell 0.5% and nickel sank close to 0.4%.

Democrats in the US House of Representatives on Tuesday unveiled a $3 trillion-plus coronavirus relief package that includes nearly $1 trillion in long-sought assistance for state and local governments. The measure would need Republican approval to become law.

China on Tuesday announced a new list of 79 US products eligible for waivers from retaliatory tariffs imposed at the height of the bilateral trade wars. The tariff exemptions, effective from May 19, 2020 to May 18, 2021, cover medical disinfectants, rare-earth ore, silver and gold ore and concentrate, some nickel, aluminum alloy products.

Data published on Tuesday showed that China's factory prices fell at the sharpest rate in four years in April, highlighting weakening industrial demand in the world's second-largest economy as the coronavirus pandemic slams global growth. China’s producer price index (PPI) fell 3.1% from a year earlier, according to the National Bureau of Statistics (NBS), compared with an expected drop of 2.6% and a 1.5% decline in March.

China's consumer inflation eased further in April on falling food prices as the country fast-tracks restoration of economic activities. NBS said that its consumer price index (CPI) grew 3.3% year on year last month, moderating from the 4.3% gain in March.

American CPI for April was also released on Tuesday, showing consumer prices in the nation dropped by the most on record in last month as the economy reeled from restrictions imposed to contain the coronavirus. The Bureau of Labor Statistics said the CPI excluding food and energy prices slumped 0.4%, the biggest monthly decline in data back to 1957.

The US Labor Department will release the April PPI on Wednesday at 8:30 a.m. ET. Analysts polled by Dow Jones are expecting a drop of 0.5% in April, following March’s decline of 0.2%. Producer prices have dropped during the pandemic, pulled down by declines in the costs of goods such as gasoline and services.

Fed Chairman Jerome Powell will deliver a speech on current economic issues on Wednesday at 9:00 a.m. ET.