Macro Roundup (Dec 17)

SHANGHAI, Dec 17 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The Fed said it will buy at least $120 billion of bonds each month “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals,” according to its post-meeting statement. The U.S. central bank also kept benchmark interest rates near zero, as expected, following the conclusion of its two-day meeting.

Federal Reserve Chairman Jerome Powell also said on Wednesday that stock prices are not necessarily highly priced given how low interest rates are.

The dollar languished near 2-1/2-year lows on Wednesday as progress toward a massive U.S. government spending bill and Covid-19 relief measures whetted risk appetite, sapping demand for the safest assets.

Also supporting sentiment, the U.S. expanded its roll-out of a vaccine from Pfizer Inc and German partner BioNTech SE, while another developed by Moderna appeared set for approval this week.

Top U.S. congressional leaders began a second meeting on Tuesday to finalize $1.4 trillion in spending and end a standoff on coronavirus relief, after signaling optimism following their first gathering.

Overnight on Wall Street, the S&P 500 closed 0.2% higher at 3,701.17. The Nasdaq Composite gained 0.5% to end its trading day at 12,658.19, seeing intraday and closing all-time highs. The Dow Jones Industrial Average, on the other hand, shed 44.77 points to close at 30,154.54.

Oil prices edged higher on Wednesday, buoyed by U.S. government data that showed crude stockpiles fell last week and by optimism about a coronavirus relief package in the United States.

Brent crude futures rose 28 cents to $51.04 a barrel. West Texas Intermediate (WTI) crude futures settled 20 cents, or 0.4%, higher at $47.82 per barrel.

U.S. crude inventories fell by 3.1 million barrels in the week to Dec. 11, the Energy Information Administration said. Analysts had expected a 1.9-million-barrel drop, after stockpiles surged in last week’s data.

“We couldn’t afford to have a build after last week,” said Bob Yawger, director of energy futures at Mizuho. “A U.S. stimulus package seems on the way, which will also be supportive.”

The IEA revised down its estimates for oil demand this year by 50,000 barrels per day (bpd) and for next year by 170,000 bpd, citing reduced jet fuel use as fewer people travel by air.

Gold prices were steady on Wednesday as expectations for more support for the U.S. economy and a dovish stance from the U.S. Federal Reserve countered pressure from optimism over COVID-19 vaccinations.

Spot gold was little changed at $1,854.18 an ounce, after touching its highest since Dec. 9 at $1,865.50. U.S. gold futures rose 0.2% to $1,858.70.

“The market has been caught between the optimism around vaccine developments and concerns around rising (COVID-19) infection rates,” Standard Chartered analyst Suki Cooper said, adding that the focus was on the FOMC meeting, Brexit and the U.S. stimulus negotiations.

On Wednesday, Germany is starting its Christmas lockdown in which schools and nonessential shops must close. The U.K. too is reconsidering plans to relax rules to allow families to gather over the festive period after high-profile criticism of the move.

On Thursday, investors will brace for the release of weekly jobless claims data and the latest numbers on U.S. housing starts. Those data releases will follow a disappointing retail sales report that kept investor sentiment in check on Wednesday. The Commerce Department said retail sales fell 1.1% in November.

Eurozone consumer price index (CPI) for November will also be released today.