Macro Roundup (Jul 12)

SHANGHAI, Jul 12 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar edged lower on Friday, along with the Japanese yen, as riskier currencies were favored, with the rally in US Treasuries running out of steam and global stock markets steadying.

Some recent soft US data, along with a surge in COVID-19 cases in many parts of the world, has fueled concerns that the global economic recovery was running out of steam, leading to an eight-day streak of declines for the 10-year Treasury yield that ended on Friday.

“This week was all about the bond market and the collapse in treasury yields,” said Edward Moya, senior market analyst for the Americas at OANDA. “Some of that move was probably overdone.”

The rise in yields supported riskier assets and currencies, with global stock markets rising and the commodity-linked Australian and New Zealand dollars catching a bid.

The Aussie rose 0.79% to $0.74905, after earlier touching a fresh low for the year at $0.7410, and the kiwi added 0.81% to $0.7002, having plunged more than 1% in the previous session.

On Wall Street, stock futures opened mostly flat late Sunday as earnings season kicks off this week.

Futures on the Dow Jones Industrial Average added 25 points, or 0.07%. S&P 500 futures edged 0.08% higher and Nasdaq 100 futures rose 0.17%.

The three major indexes closed at record highs on Friday after a sell-off Thursday as investors worried about a potential slowdown in U.S. economic growth. Friday’s rally brought the averages into the green for the week; the Dow added 0.24% week-to-date, while the S&P 500 and Nasdaq each rose about 0.4% in the same period.

Stocks tied to the economic recovery that fell during Thursday’s session logged gains on Friday. Financial names rebounded, with Bank of America and Goldman Sachs both jumping more than 3%. Travel-related stocks also rose; Royal Caribbean popped 3.6%, Wynn Resorts gained close to 2%, and American Airlines and United Airlines both added more than 2%.

The major averages' record highs come ahead of the start of quarterly earnings reports. S&P 500 companies' profits are expected to be up 65% from the same quarter a year ago, according to Refinitiv, bouncing back from the worst of the pandemic. The expected surge in profits would be the strongest earnings growth since the fourth quarter of 2009, as stocks recovered from the financial crisis.

Oil prices rose for a second day on Friday as data showed a draw in US inventories but were heading for a weekly loss amid uncertainty over global supplies after an OPEC+ impasse.

Brent crude oil futures settled 1.93%, or $1.43, higher at $75.55 per barrel. US West Texas Intermediate futures settled 2.22%, or $1.62, higher at $74.56 per barrel.

Prices on both sides of the Atlantic were on track for around a 1% weekly drop, dragged down by the collapse of output talks between the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together known as OPEC+.

US crude and gasoline stocks fell and gasoline demand reached its highest since 2019, the US Energy Information Administration said on Thursday, signalling increasing strength in the economy.

Gold rose on Friday, heading for its best week in seven, bolstered by a weaker dollar and concerns that the spread of the Delta variant of the coronavirus could slow a global economic recovery.

Spot gold rose 0.5% to $1,810.99 per ounce by 2:44 p.m., and was up 1.4% for the week. US gold futures settled 0.6% higher at $1,810.6.

“We do continue to have issues with the Delta variant. That may very well slow economic progress, not only in the United States, but of course around the world,” said Bart Melek, head of commodity strategies at TD Securities.

“As investors get convinced that the U.S Federal Reserve indeed is targeting full employment and that it's not particularly worried about inflation moving above targets for a period, we could see gold's move over $1,850 by year-end.”

Gold, a hedge against economic and political uncertainties and also rising inflation, attracted buyers as vaccination shortfalls and highly contagious coronavirus variants prompted fresh restrictions, especially in Southeast Asia.

Monthly PPI rate in Japan and Canadian National Economic Confidence Index will be released today.