Macro Roundup (Jul 2)

SHANGHAI, Jul 2 (SMM) – This is a roundup of global macroeconomic news last weekend and what is expected today.

Last weekend

The US dollar index fell below 95 to close at 94.5 last Friday night, with pressure from a strengthened euro as the European leaders reached a migration deal. 

LME base metals saw mixed trading with zinc leading the loss and closing 1.7% lower on sluggish demand and doubt over supply cut across China’s zinc smelters. Aluminium fell nearly 1% and copper inched down. Nickel rose over 1%, while lead and tin went up slightly. SHFE base metals edged down across the board. 

The eurozone consumer price index (CPI) in June grew 2% year on year, matching expectations and marking a record high since February 2017. Meanwhile, the core figure rose 1% on the year last month, compared with May’s growth of 1.1%.

These figures came as a solace for the European Central Bank (ECB) as it tried to avoid additional economic stimulus. In June’s meeting, ECB made it clear that it will end quantitative easing by the end of this year and will keep interest rates unchanged to at least the summer of 2019.

The US personal consumption expenditures (PCE) price index in May rose 0.2% from April, which was flat from April’s gain. The figure was up 2.3% from a year ago, the biggest rise since March 2012. The core PCE price value, excluding the volatile food and energy components, gained 2% from last year, highest growth since April 2012. 

The US consumer prices accelerated in the year to May, with a measure of underlying inflation hitting the Federal Reserve Board's 2% target for the first time in six years.

The acceleration in inflation came despite a moderation in consumer spending. Consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.2% last month.

The final reading of US consumer confidence fell below the expected 99 to stand at 98.2 in June due to worries over threat from international tariffs, according to the University of Michigan survey. Its consumer expectations index came in at 86.3 in June, marking a record low in five months. However, year-ahead inflation expectations rose to 3%, the highest level since March 2015. The survey showed that American families are worried that future trade tensions will have an impact on prices and overall economic growth.

Data from Baker Hughes showed that the number of active US rigs for oil fell 4 units to 858 units over the week ended June 29. Natural gas rigs fell 1 unit to 187 units. This brought the overall active rigs down by 5 units, to 1,047 units.

China’s official manufacturing purchasing managers’ index (PMI) came in at 51.5 in June, down 0.4 from May but up 0.2 from the average during the first half of the year. The official non-manufacturing PMI stood at 55 in June, up from the expected 54.8 and May’s 54.9. The composite PMI covering both manufacturing and services activity fell to 54.4 in June, from May’s 54.6.

The manufacturing imports and exports slowed down in June while non-manufacturing industries maintained a steady momentum of development. The construction industry accelerated its expansion, as its business activity index for house building rose for four consecutive months, reaching a high of 68 in June, said NBS.

Day ahead

Key factor to watch today include China’s Caixin manufacturing PMI, the Markit manufacturing PMI for the US, eruozone and its countries, and the US ISM manufacturing PMI in June.