Macro Roundup (Jul 13)

SHANGHAI, Jul 13 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar edged higher across the board on Monday as concerns about the pandemic encouraged investors to seek a safe haven, and as they awaited more clues about the global economic recovery.

With markets hyper-sensitive to any talk of early tapering, US inflation data on Tuesday will be closely watched ahead of testimony by Federal Reserve Chair Jerome Powell on Wednesday and Thursday.

“Market caution reigned at the start of the week, weighing on risk sentiment and boosting the US dollar,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

Reports from around the globe of surging infections of the Delta coronavirus variant also hurt investors' appetite for riskier assets.

Investors will look to US inflation data on Tuesday and Federal Reserve Chair Jerome Powell's economic testimony on Wednesday and Thursday as they gauge expectations for the Fed to dial back on stimulus as soon as this year, Manimbo said.

Any signs that inflation could be more persistent than previously thought could fan expectations that the Fed may exit from current pandemic-era stimulus earlier, supporting the dollar against other major currencies.

On Wall Street, US stock futures were mostly flat on Monday night after the Dow Jones Industrial Average rose to almost 35,000 ahead of the second-quarter earnings season for banks, which kick off Tuesday.

The Dow Jones Industrial Average futures fell 10 points, or 0.03%. The S&P 500 futures fell 0.06% and the Nasdaq 100 fell 0.002%.

In the regular trading session the Dow rose 126.02 points to close just below 35,000. The S&P 500 and Nasdaq Composite gained 0.3% and 0.2%, respectively, to record closes.

Investors are turning their attention to banks as they prepare to release their second quarter earnings this week, starting with JPMorgan and Goldman Sachs Tuesday before the opening bell. JPMorgan and Goldman Sachs ended the day 1.4% and 2.3% higher, respectively.

Banks are expected to double this quarter, following the 138% earnings growth the sector saw in the first quarter. The S&P 500 broadly is expected to produce its strongest earnings growth since the fourth quarter of 2009.

“High expectations for earnings and each companies' forward guidance will push markets higher or disappointment may create a small pullback in equity markets,” said Jeff Kilburg, chief investment officer at Sanctuary Wealth. “Eyes will be on the major banks to set the tone for the next few weeks of earnings.”

Crude futures slipped on Monday as concerns over slowing global growth outweighed the prospect of tightening supply after talks among key producers to raise output in coming months stalled.

Brent crude for September fell 0.52% to settle at $75.16 per barrel while US West Texas Intermediate crude for August settled at $74.10 a barrel, for a loss of 0.62%.

Both benchmarks fell around 1% last week but still hover near highs last reached in October 2018.

The spread of coronavirus variants and unequal access to vaccines threaten the global economic recovery, finance chiefs of the G20 large economies warned on Saturday.

A tally of new COVID-19 infections shows them rising in 69 countries, with the daily rate pointing upwards since late-June and now hitting 478,000.

“The market has been a bit negative as of late amid the growing sense that the latest OPEC+ impasse could be a precursor to a pump-and-grab scenario, meaning a lot more oil potentially gets put on the market,” said Stephen Brennock of oil broker PVM.

Gold fell on Monday in step with a stronger dollar as investors cautiously looked forward to US inflation data that could influence the Federal Reserve's timeline for easing its bond purchases.

Spot gold was down 0.2% to $1,804.80 per ounce by 1:50 p.m. ET. US gold futures settled 0.3% lower at $1,805.90.

The closely watched US consumer price index (CPI) report is due to be released on Tuesday. Fed Chair Jerome Powell is scheduled to testify before Congress on Wednesday and Thursday.

“We're almost in this environment where good news is bad news and bad news is good news,” said David Meger, director of metals trading at High Ridge Futures, referring to the CPI data and its impact on Fed policy.

If inflation data becomes more benign, the Fed would feel slightly less inclined to ease its asset purchases, which should benefit gold, but if it is concerned about inflation, it is more likely “to tap the brakes,” pressuring gold, Meger added.

China's June trade account, Germany's June CPI annual rate final value and US seasonally-unadjusted CPI annual rate in June will be released today.