Macro Roundup (Oct 21)

SHANGHAI, Oct 21 (SMM) - This is a roundup of global macroeconomic news last night and what is expected today.

U.S. bonds drove currencies on Wednesday, with a rise in long-term rates pushing the dollar to an almost four-year high on the yen, but a decline in shorter-dated yields putting it on the back foot against most other major peers.

The dollar and yen were also under pressure from a global equity rally that sapped demand for assets regarded as safe havens.

The dollar climbed as high as 114.585 yen for the first time since November 2017, with benchmark 10-year Treasury yields touching a fresh five-month high at 1.6630% in Asia. Higher long-term U.S. yields increase the allure of those assets to Japanese investors.

However, two-year Treasury yields hovered around 0.4050% after retreating sharply overnight from Monday’s 19-month high of 0.4480%, signaling a scaling back of bets for early Federal Reserve interest rate hikes.

That contrasted to a rise in wagers this week for faster rate increases in the U.K. and New Zealand, which also pulled up expectations in neighbors like the euro zone and Australia.

Stock futures dipped slightly in overnight trading on Wednesday after the blue-chip Dow Jones Industrial Average retook its record high amid solid corporate earnings.

Dow futures fell 35 points. S&P 500 futures and Nasdaq 100 futures both traded 0.1% lower.

The 30-stock average jumped about 150 points to hit an intraday record Wednesday, surpassing its peak from mid-August. The S&P 500 climbed 0.4% for its sixth straight positive day, sitting just 0.2% below its all-time high. The tech-heavy Nasdaq Composite closed Wednesday’s session slightly lower, however.

“The Dow traded to a new all-time high today, again showing the resilience of dip buyers and the importance of cyclical companies in the stock market rally,” said Chris Zaccarelli, CIO at Independent Advisor Alliance.

Investors have been monitoring the third-quarter earnings season to assess profit growth as well as signs of cost pressures and supply-chain disruptions. Of the approximately 70 S&P 500 companies that have reported results so far, 86% posted earnings that topped analysts expectations, according to Refinitiv.

Oil prices edged higher on Wednesday, rebounding from early losses after U.S. crude stockpiles unexpectedly fell and inventories at the nation’s largest storage site hit their lowest level in three years.

Brent crude futures rose 74 cents, or 0.87%, to $85.82 a barrel, lingering close to multi-year highs.

November U.S. West Texas Intermediate (WTI) crude, which expires on Wednesday, settled 1.1% higher at $83.87 per barrel.

The market had softened overnight after the Chinese government stepped up efforts to tame record high coal prices and ensure coal mines operate at full capacity as Beijing moved to ease a power shortage. Oil prices have in part been swept up in surging natural gas and coal prices worldwide in anticipation that power generators may switch to oil to provide electricity.

Oil has also been rising, however, as supply tightens, with OPEC choosing to remain on the sidelines rather than add barrels to the market, and as U.S. demand has ramped up.

Gold prices edged lower on Wednesday as surging U.S. bond yields dented the metal’s appeal and bets for upbeat corporate earnings lifted risk-on sentiment.

Spot gold dropped 0.1% to $1,767.71 per ounce by 0100 GMT. The metal rose as much as 1.2% on Tuesday before giving up most of those gains as Treasury yields rallied. U.S. gold futures fell 0.1% to $1,768.40.

The pan-European Stoxx 600 provisionally ended 0.35% higher, with most sectors and major bourses in positive territory.

Food and beverage stocks gained 1.9% to lead gains, while travel and leisure stocks slipped more than 1%.

European investors were reacting to a busy day of earnings, with Carrefour, Atos, Metro, Sartorious, AkzoNobel, Roche, Nestle, Antofagasta and Metro Bank all reporting on Wednesday.