Macro Roundup (Mar 31)

SHANGHAI, Mar 31 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar advanced against major currencies on Tuesday, climbing to a one-year high versus the yen, as increasing U.S. vaccinations and a major stimulus package backed expectations of a strong recovery from the pandemic, lifting Treasury yields.

Benchmark 10-year Treasury yields rose to 14-month highs on Tuesday at 1.776% before pulling back later in the session.

Treasury yields hit new highs a day before President Joe Biden is set to outline how he intends to pay for a $3 trillion to $4 trillion infrastructure plan.

The dollar index rose above the 93 mark and was last up 0.4% at 93.29. It hit a high of 93.357, its highest level in four months.

“U.S. economic optimism has been the biggest driver this whole time with the move from 89 in the dollar index to 93,” said Erik Nelson, macro strategist at Wells Fargo in New York.

“There is a bit of momentum behind the move. We have broken some key technical levels in some of the key currencies, including the dollar index,” he added.

The dollar index has risen in five of the last six sessions.

On Wall Street, US stock futures were flat in overnight trading on Tuesday after the Dow Jones Industrial Average slipped from its record level amid fears about rising interest rates.

Dow futures rose just 12 points. S&P 500 and Nasdaq 100 futures also hovered around the flatline.

The major averages were pressured Tuesday by rising interest rates, as the U.S. 10-year Treasury yield notched a 14-month high of 1.77%. Bond yields have been on the rise this year amid a strong Covid-19 vaccine rollout and expectations of a broad economic recover.

The Dow Jones Industrial Average lost more than 100 points, falling from a record high reached on Monday. The S&P 500 fell about 0.3%.

The Nasdaq Composite dipped about 0.1% as Facebook, Amazon, Apple, Netflix and Microsoft declined. Big Tech stocks are especially sensitive to rising rates as they depend on borrowing money cheaply to invest in their future growth.

Oil prices slid on Tuesday as the Suez Canal reopened to traffic and the dollar rallied.

Focus in the market shifted to the upcoming OPEC+ ministerial meeting where analysts expect the group to extend supply curbs given dim demand prospects.

Brent crude fell 84 cents, or 1.3%, to settle at $64.14 a barrel while West Texas Intermediate U.S. oil ended the session down $1.01, or 1.6%, at $60.55 barrel.

Ships were moving through the Suez Canal again a day after tugs refloated the Ever Given container carrier, which had blocked the passage for almost a week. The backlog of 422 ships could be cleared in 3-1/2 days, the canal’s chairman said.

“The price gains that accumulated during the Suez blockade were, as expected, short-lived and are now being erased with the gradual return to normal traffic,” Rystad Energy’s oil markets analyst Louise Dickson said.

Gold prices slipped nearly 2% on Tuesday as a firmer dollar, higher Treasury yields and hopes for a faster U.S. economic recovery dampened demand for safe-haven bullion.

Spot gold was down 1.7% at $1,682.81 per ounce in afternoon trading. Earlier in the session, bullion fell about 2% to its lowest since March 8 at $1,678.40. U.S. gold futures settled 1.7% down at $1,686.

Benchmark U.S. 10-year Treasury yields rose to a 14-month peak on Tuesday morning before pulling back, bolstered by hopes of stronger growth and inflation ahead of U.S. President Joe Biden’s multitrillion-dollar infrastructure plan.

“The short-term drivers just appear to be becoming very bearish for gold,” said Edward Moya, senior market analyst at OANDA, pinning gold’s recent weakness on a firmer dollar and higher yields.

While gold is likely to see some pressure in the short-term, investors pricing in inflationary concerns could “eventually trigger a frenzy of gold buying,” Moya added.

Tuesday's US data further supported the upbeat outlook on the world’s largest economy. Reports showed that U.S. consumer confidence climbed in March to its highest level since the start of the COVID-19 pandemic, while housing prices soared year-on-year in January.

Key economic data slated for release today include China's official manufacturing PMI in March, Germany seasonally-adjusted unemployment rate in March, the preliminary value of euro zone seasonally-unadjusted CPI annual rate in March, ADP employment in the US in March, March PMI in Chicago, USA, monthly rate of US Pending Home Sales Index after seasonal adjustment in February and US EIA crude oil inventory change as of March 26.