Macro Roundup (Oct 31)

SHANGHAI, Oct 31 (SMM) – This is a roundup of global macroeconomic news last night and what is expected in the day ahead.

Last night

The US dollar fell against other major currencies after the US Federal Reserve lowered interest rates for the third time this year and signalled the central bank will pause from here.

The dollar index, which tracks the greenback against a basket of other currencies, fell 0.21% and ended at 97.47.

The Fed lowered the overnight lending rate to a target range of 1.5% to 1.75%. Notably, the FOMC removed the key clause from its post-meeting statement that the Fed is committed to “act as appropriate to sustain the expansion.” Removing this language signalled the central bank might be finished cutting rates.

LME base metals mostly fell while the SHFE complex traded higher with nickel as the best performer. LME copper shed 0.57%, aluminium went flat, zinc lost 1.41%, nickel eased 0.18%, lead dropped 2.83%, and tin fell 0.77%.

SHFE nickel climbed 1.15%, copper advanced 0.36%, aluminium rose 0.44%, lead gained 0.3%, tin increased 0.15%, while zinc lost 0.03%. 

US gross domestic product — the broadest measure of the US economy — grew faster than expected in the third quarter, but slowed slightly as business investment continued to decline.

The Commerce Department said Wednesday that economic activity grew at an annualised rate of 1.9% in the third quarter, down slightly from the 2% pace in the second quarter. Economists polled by Dow Jones had expected the first look at third-quarter economic growth to come in at 1.6%.

The better-than-expected data was the result of continued consumer spending as well as government expenditures, the department said. Personal consumption expenditures, a gauge of spending by American households, rose at a 2.9% annualised rate while government spending grew at a 2% rate.

On the inflation front, the personal consumption expenditures (PCE) index rose just 1.4% in the third quarter compared to an increase of 2.2% in the second quarter. 

Core PCE, which strips out volatile food and energy prices and is the Federal Reserve’s preferred inflation metrics, was up 2.2% compared to 1.9% posted in the prior quarter. The core measure was above analysts’ expectations of 2.1%.

US private payrolls grew at a faster-than-expected pace in October, but the solid growth was offset by a sharp downward revision for the previous month, according to a survey by ADP and Moody’s Analytics on Wednesday. 

The survey showed that companies hired 125,000 employees in October, 25,000 more than expected by economists polled by Dow Jones. September payrolls were revised down 93,000, a decrease of 42,000 from the ADP/Moody’s Analytics survey on October 2.

Oil futures ended Wednesday at their lowest in just over a week after the Energy Information Administration (EIA) reported a larger-than-expected weekly US crude-supply increase of almost 6 million barrels, but gasoline inventories declined a bit more than forecast.

The EIA reported that US crude supplies rose by 5.7 million barrels for the week ended October 25.

According to the latest business and consumer surveys published by the European Commission on Wednesday, the consumer confidence index for the eurozone fell to -7.6 in October from -6.5 in September and came in line with the market expectation.

"In October 2019, the economic sentiment indicator (ESI) decreased in both the euro area (by 0.9 to 100.8) and the EU (by 0.9 to 99)," the Commission further added in its press release.

Day ahead

The US will publish data on its weekly unemployment claims and the personal expenditure data for September. China will release the official data on its manufacturing purchasing managers' index (PMI) for October, and the eurozone will publish data on its gross domestic product for the third quarter.