Macro Roundup (Jul 14)

SHANGHAI, Jul 14 —This is a roundup of global macroeconomic news last Friday and what is expected today.

The dollar retraced from a 20-year high and the euro broke back above parity, following a brief dip below, after data on Wednesday showed U.S. consumer price inflation surged to a more than 40-year high in June.

U.S. annual consumer prices jumped 9.1% in June, the largest increase in more than four decades, leaving Americans to dig deeper to pay for gasoline, food, healthcare and rent.

The euro plunged to $0.9998 against the greenback after the data, breaking below the $1 level for the first time since December 2002, before bouncing back to last trade at $1.0056.

The single currency is viewed as having support at the $1 area.

The dollar index reached 108.59, the highest since October 2002, before falling back to 108.01.

The euro is being hurt as the region faces an energy crisis sparked by sanctions imposed on Russia due to its invasion of Ukraine.

Stock futures slipped Wednesday night as traders look ahead to earnings from major U.S. banks.

Dow Jones Industrial Average futures shed 117 points, or 0.38%. S&P 500 and Nasdaq 100 futures were down 0.41% and 0.47%, respectively.

Stocks slipped during Wednesday’s session after June inflation data came in hotter than expected, hitting its highest level in since 1981 and stoking fears that the Federal Reserve will have to hike interest rates more aggressively in the coming months to bring down price increases.

The consumer price index rose 9.1% on the year in June, higher than economist estimates of an 8.8% year-over-year increase. Core CPI, which excludes volatile prices of food and energy, was 5.9%, also ahead of the 5.7% estimate.

In addition, the Beige Book, released Wednesday by the Fed showed worries of an upcoming recession amid high inflation.

The CPI report also impacted treasuries, sending the 2-year Treasury yield up nine basis points to about 3.138% while the yield on the 10-year Treasury fell about 4 basis points to 2.919. An inversion of the two is a popular signal of a recession.

Oil prices rose on Wednesday, recovering from the previous day’s massive sell-off, despite a hike in U.S. oil inventories and after U.S. inflation figures bolstered the case for another big Federal Reserve interest rate increase.

Brent crude ended the day 8 cents higher at $99.57 per barrel, while U.S. West Texas Intermediate crude settled 46 cents higher at $96.30 per barrel.

Gold rebounded from a near one-year low on Wednesday as the dollar retreated following an initial rally, helping bullion stave off pressure from prospects of steep rate hikes after U.S. consumer prices surged.

Spot gold rose 0.4% to $1,732.69 per ounce by 4:02 p.m. ET, clambering from its lowest since August 2021 at $1,707.09 after the U.S. data powered the dollar to a fresh multi-decade peak.

U.S. gold futures was up 0.4% at $1,731.2. U.S. consumer prices accelerated in June, cementing the case for aggressive rate hikes from the Federal Reserve later this month.

The pan-European Stoxx 600 index provisionally closed down 0.9% with almost all sectors in negative territory following hotter-than-expected U.S. inflation data. The consumer price index, a broad measure of everyday goods and services, soared 9.1% in June from a year ago, and above the 8.8% Dow Jones estimate.