Macro Roundup (Sep 29)

SHANGHAI, Sep 29 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The US dollar surged to its highest in more than 10 months on Tuesday, tracking the rise in Treasury yields, as investors looked ahead to the Federal Reserve possibly reducing asset purchases in November and an interest rate hike likely to follow.

On Tuesday, benchmark 10-year Treasury yields hit a three-month peak, and were last up four basis points at 1.5253%.

The rise in yields accelerated after the US central bank turned hawkish at last week’s monetary policy meeting, reinforcing the market view for a sooner-than-expected Fed taper.

“Yields are generally moving higher as rising inflation expectations weigh on the relative attractiveness of government bonds, but are climbing even faster in the United States as traders bet the Federal Reserve will move more quickly than its global counterparts,” said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.

“Rate differentials are tilting toward the dollar, weakening low-yielders and putting pressure on economies with significant borrowing needs.”

US stock futures were mostly flat Tuesday night after the Nasdaq plummeted in its worst day since March as a spike in bond yields sent stocks tumbling.

Dow Jones Industrial Average futures rose 78 points, or 0.23%. S&P 500 and Nasdaq 100 futures added 0.16% and 0.08%, respectively.

Shares of the semiconductor company Micron fell more than 4% in extended trading after it reported earnings and revenue outlook for the first quarter of 2022 that missed consensus estimates.

In regular trading, the Nasdaq Composite dropped 2.83% to 14,546.68 for its worst day since March. The S&P 500 shed 2.04% and the Dow Jones Industrial Average lost 569.38 points, or 1.63%.

The Dow and S&P are mow down 3% for September. The Nasdaq is down more than 4.5%.

International oil benchmark Brent crude jumped during early trading on Tuesday morning, topping $80 per barrel for the first time since October 2018 before reversing those gains and dipping into negative territory. The breather comes after five straight positive sessions for oil, with the rally supported by demand rebounding as supply remains tight.

West Texas Intermediate crude futures, the US oil benchmark, hit a more than two-month high of $76.67 per barrel before also pulling back. The contract finished the day at $75.29 per barrel, for a loss of 0.21%.

Both WTI and Brent are coming off five straight weeks of gains, and each is up more than 50% for 2021.

Gold prices dropped more than 1% to hit a seven-week low on Tuesday, as the dollar strengthened and US Treasury yields surged on expectations of sooner-than-expected hike in interest rates by the Federal Reserve.

Spot gold was down 0.8% at $1,736.81 per ounce by 01:43 p.m. EDT, after falling to its lowest since Aug. 11 to $1,726.19 earlier in the session.

US gold futures settled 0.8% lower at $1,737.5 per ounce.

“The dot plots set by FOMC members signalling an earlier-than-previously-expected rise in Fed’s fund rates, and the move higher across the yield curve continue to have a negative impact on gold,” said Bart Melek, head of commodity strategies at TD Securities.

The pan-European Stoxx 600 closed down by around 2% provisionally, with tech stocks dropping 4.4% to lead the losses.

European traders also continued to digest the fallout of the German election on Tuesday after the vote on Sunday resulted in more uncertainty for the country.