Macro Roundup (Dec 24)

Published: Dec 24, 2018 08:57 (GMT+8)
Macro Roundup

SHANGHAI, Dec 24 (SMM) – This is a roundup of global macroeconomic news last weekend.

Last weekend

LME base metals, except for tin, traded lower on Friday with the biggest losses in zinc, down over 2% on the day. Nickel, copper and lead dropped some 0.7%, and aluminium fell 0.4%.

Most SHFE base metals closed lower on Friday night. Zinc in Shanghai was also the worst performer, down 1.4%. Lead slid 0.7%, copper slipped 0.3% and nickel edged down 0.06% while tin nudged up 0.07% and aluminium gained 0.1%.

The US dollar index recovered to 97 on Friday from a month-low on Thursday after the Federal Reserve signalled fewer interest rate hikes over the next two years and expressed caution about the US economic outlook.

The threat of a possible US government shutdown also weighed on the greenback.

The US economy slowed more than expected in the third quarter, but the momentum is likely enough to keep growth on track to hit the administration's target of 3% this year.

Gross domestic product (GDP) increased at a 3.4% annualised rate, the Commerce Department said on Friday in its third reading of third-quarter GDP growth. That was down from 3.5% estimated in October.

The revisions to the third-quarter GDP reading reflected markdowns to consumer spending and exports. Inventory accumulation was, however, much bigger than previously estimated. There were downward revisions to business spending on equipment and nonresidential structures, as well as residential investment.

The economy grew at a 4.2% pace in the second quarter and appeared to be slowing in the fourth quarter as the trade deficit grew. Sluggish business spending on equipment and a weak housing market also weighed on growth.

Orders to US factories for long-lasting goods rose moderately last month, but the gain was driven entirely by demand for military aircraft. Excluding transportation equipment, orders fell.

The Commerce Department said on Friday that durable goods orders rose 0.8% in November, following a sharp fall of 4.3% the previous month when orders for commercial and military aircraft plunged. Orders in November, excluding transportation, dropped 0.3%. 

The core US personal consumption expenditures (PCE) price index – the Fed’s preferred measure of inflation – rose 1.9% last month compared to a year earlier, up from 1.8% in October, but still below the central bank’s 2% target. The core PCE excludes the volatile food and energy components.

The University of Michigan's US consumer sentiment index rose to 98.3 in the final reading of the year from the previous estimate of 97.5 and surpassed the market estimate of 97.5.

"Consumer confidence remained in December at the same record favorable levels as it has throughout the year. The sentiment index averaged 98.4 in 2018, the best year since 107.6 in 2000," the UoM's Surveys of Consumers chief economist, Richard Curtin said.

He added: "While the plunge in stock prices has recently garnered the most attention in the national press, consumers have focused more on their concerns about income and job prospects. Consumers reported more negative than positive news about job prospects for the first time in two years, with the shift widespread across socioeconomic subgroups."

German consumer sentiment is set to be stable at the start of the new year, with some lingering global risks such as an escalation in the trade conflict with the US or a no-deal Brexit, market research group GfK said on Friday.

GfK's forward-looking confidence index is expected to come in at 10.4 points in January, unchanged from December, it said. Economists had forecast a 10.3 point reading.

US drillers added 10 oil rigs in the week to December 21, bringing the total count to 883, Genergy services firm Baker Hughes said in report on Friday. This was the biggest weekly gain in rig numbers since early November.

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