Macro Roundup (Oct 12)

SHANGHAI, Oct 12 —This is a roundup of global macroeconomic news last night and what is expected today.

The safe-haven U.S. dollar gained broadly in volatile trading on Tuesday, adding to recent gains, after a top Bank of England official reiterated that the central bank will end its bond-buying program on Friday and told pension fund managers to finish rebalancing their positions within that time frame.

That fueled concerns that the BoE’s withdrawal could re-ignite market volatility around the world and cause financial instability.

BoE Governor Andrew Bailey said pension funds should finish rebalancing their positions by Friday when the British central bank is due to end its emergency support program for the county’s fragile bond market.

Earlier on Tuesday, the Pensions and Lifetime Savings Association, an industry body, urged the BoE to extend the bond-buying program until Oct. 31 “and possibly beyond.”

Sterling dropped to a two-week low of $1.0962 after Bailey’s remarks, down 0.9%.

Adding to the gloom was a downbeat report from the International Monetary Fund that said countries representing a third of world output could be in recession next year. The IMF also cut its 2023 global growth forecasts further.

Stock futures ticked higher Tuesday night as investors awaited the latest inflation numbers and the minutes from the Federal Reserve’s latest meeting.

Futures tied to the Dow Jones Industrial Average added 44 points, or 0.1%. S&P 500 futures and Nasdaq 100 futures were each up about 0.2%.

The moves came after the S&P 500 and Nasdaq Composite fell 0.65% and 1.1%, respectively, to post their fifth straight day of declines. The Dow ended the day on a higher note, up about 36 points, but gave back most of its gains from a rally earlier in the session.

Oil prices settled 2% lower on Tuesday, extending the previous session’s almost 2% decline, as recession fears and a flare-up in COVID-19 cases in China raised concerns over global demand.

World Bank President David Malpass and International Monetary Fund Managing Director Kristalina Georgieva warned on Monday of a growing risk of global recession and said inflation remained a continuing problem.

Brent crude settled down $1.90, or 2%, to $94.29 a barrel while U.S. West Texas Intermediate crude settled down $1.78, or 2%, to $89.35.

Gold bounced off a one-week low on Tuesday, lifted by a softer dollar, while investors braced for a key U.S. inflation report that is expected to influence the Federal Reserve’s monetary policy stance.

Spot gold rose 0.6% to $1,677.70 per ounce, after rising about 1% earlier in the session. U.S. gold futures settled 0.6% higher at $1,686.00.

The pan-European Stoxx 600 index provisionally closed down 0.5%, recovering somewhat from steeper losses earlier in the session.