Macro Roundup (Mar 25)

SHANGHAI, Mar 25 (SMM) – This is a roundup of global macroeconomic news last weekend and what is expected today.

Last weekend

The US dollar climbed in last Friday's trading, as investors grappled with an inverted US Treasury yield curve and another round of disappointing economic data in the eurozone that weighed on the euro.

On Friday, the spread between three-month Treasury bills and 10-year note yields inverted for the first time since 2007 after the US purchasing managers' index (PMI) manufacturing data missed estimates. This inversion of the yield curve is widely seen as an indicator of recession.

Base metals declined across the board as LME copper led the loss and dropped 1.67%, zinc and lead fell 0.51%, nickel fell 0.38%, tin went down 0.19%, and aluminium edged down. SHFE copper dropped 1.51%, nickel lost 1.15%, zinc fell 0.34%, aluminium closed 0.33% lower, tin slid 0.21%, and lead went down slightly.

"March's flash PMIs add to evidence that GDP growth was subdued in the three largest advanced economies in the first quarter, with Germany continuing to take the brunt of the global manufacturing slowdown," Simon MacAdam, global economist at Capital Economics, wrote in a note.

The flash eurozone manufacturing PMI fell to a 71-month low of 47.6 in March, with Germany’s slipping to 44.7, a 79-month low for Europe’s largest economy. The eurozone manufacturing PMI for February stood at 49.3, and that of Germany at 47.6. 

"The downturn in Germany's manufacturing sector has become more entrenched, with March’s flash data showing accelerated declines in output, new orders and exports. Uncertainty towards Brexit and US-China trade relations, a slowdown in the car industry and generally softer global demand all continue to weigh heavily on the performance of the manufacturing sector, which is now registering the steepest rate of contraction since 2012," commented Phil Smith, principal economist at IHS Markit.

The US flash PMI for manufacturing in March also fell to a 21-month low of 52.5, compared with February’s 53, while the services PMI in March weakened to a two-month low of 54.8.

"The US businesses reported a softer end to the first quarter, with output growth easing to the second lowest recorded over the last year. The PMI survey data nevertheless remain encouragingly resilient, indicative of the economy growing at an annualised rate in excess of 2% in the first quarter, suggesting some potential upside to many current growth forecasts," said Chris Williamson, chief business economist at IHS Markit. 

US home sales increased by 11.8% in February, as accelerating wages and falling mortgage rates improved affordability.

The National Association of Realtors said that 5.51 million existing homes were sold last month, a sharp rebound from 4.94 million in January.

Day ahead

The Ifo Institute will publish a report on the German business climate in March.