Macro Roundup (Dec 21)

SHANGHAI, Dec 21 (SMM) – This is a roundup of global macroeconomic news last night and what is expected today.

Last night

LME base metals traded mixed on Thursday. Lead gained 0.9% on the day. Aluminium rose 0.4% and tin nudged up close to 0.1% while zinc edged down close to 0.1%, nickel declined 0.2% and copper lost 0.8%.

SHFE base metals, except for tin, ended in the black across the board overnight. Zinc advanced 0.6%, nickel and lead gained some 0.3%, aluminium inched up 0.2% and copper edged up 0.1%.

The US dollar index saw its largest daily percentage drop in six weeks on Thursday after the Federal Reserve signalled fewer interest rate hikes over the next two years and expressed caution about the US economic outlook.

China's central bank decided to keep short-term borrowing rates steady on Thursday, a day after it announced measures to encourage lending to small firms.

On Thursday, the People's Bank of China (PBOC) conducted 120 billion yuan ($17.4 billion) of seven-day reverse repos at an interest rate of 2.55% and 30 billion yuan of 14-day reverse repos at 2.7%, unchanged from previous operations.

The injection followed 60 billion yuan of reverse repos conducted on Wednesday. The PBOC has pumped funds into the market for four consecutive days this week, after a suspension of reverse repos that lasted for a record 36 straight trading days.

Through reverse repos, the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.

The number of Americans filing applications for jobless benefits rose marginally from near a 49-year low last week, suggesting underlying strength in the labor market and broader economy.

Initial claims for state unemployment benefits increased 8,000 to a seasonally adjusted 214,000 for the week ended December 15, the Labor Department said on Thursday. Claims dropped to 206,000 in the prior week, close to the 202,000 reached in mid-September, the lowest since December 1969.

The Labor Department said that no claims were made last week. Claims have been volatile in recent weeks, with some economists saying an early Thanksgiving holiday had pulled forward seasonal layoffs, throwing off a model that the government uses to smooth the data for seasonal fluctuations.

Day ahead

A slew of economic data slated for release today include US gross domestic product (GDP) for the third quarter, personal consumption expenditures (PCE) core inflation, personal income and spending and durable goods orders for November, the University of Michigan consumer sentiment for December and weekly rig counts as well as German GfK consumer confidence index for January and eurozone consumer confidence for December.