Macro Roundup (Jul 13)

SHANGHAI, Jul 13 (SMM) – This is a roundup of global macroeconomic news last night and what is expected today.

Last night

The US dollar index continued to gain on steadily-rising US inflation data and trade war saga. It closed at 94.8, with a slower growth rate from Wednesday. 

Base metals rebounded for the most part as LME nickel led the gains and closed over 2% higher. It touched a one-week high overnight. Tin and copper rose over 1%, lead and zinc inched up, while aluminium lost nearly 1%. SHFE lead dipped 0.89% and aluminium closed slightly lower. Other base metals edged up. 

The US consumer price index (CPI) in June rose 0.1% from May, lower from the expected and May’s 0.2% increase. However, the underlying trend continued to indicate a steady build-up of inflation pressures that could keep the Federal Reserve Board on a path of gradual interest rate increases.

The CPI year-on-year growth last month was 2.9%, higher from May's 2.8%, marking the biggest gain since February 2012. 

Excluding the volatile food and energy components, the core CPI rose 0.2% in June, flat from May's gain. That brought the annual increase in the core CPI to 2.3%, the largest rise since January 2017.

A tightening labour market and rising raw material costs are likely to push up inflation through next year. Manufacturers are facing rising input costs, partly due to tariffs imposed by the Trump administration on lumber, aluminium and steel imports.

The US initial claims for unemployment benefits dropped more than expected, by 18,000 to a seasonally adjusted 214,000 for the week ended July 7, the lowest level since early May. This indicated that labour market conditions remained robust in early July. 

The four-week moving average of initial claims fell 1,750 to 223,000 last week. 

The number of people receiving benefits after an initial week of aid dipped 3,000 to 1.74 million in the week ended June 30. The four-week moving average of the so-called continuing claims rose 9,500 to 1.73 million.

The current labour market is believed to approach or at full employment. The US economy created 213,000 jobs last month. While June's unemployment rate rose to 4% from an 18-year low of 3.8% in May, the increase was due to more people entering the labour force, a positive sign for the job market.

Day ahead

Key factors to watch today include China's trade balance as well as import and export data in June, the US import price index last month and its July consumer confidence surveyed by the University of Michigan.