Macro Roundup (Nov 9)

SHANGHAI, Nov 9 —This is a roundup of global macroeconomic news last night and what is expected today.

The dollar slid on Tuesday as rising German bond yields strengthened the euro, but a strong reading of the consumer price index later this week could reverse the currency’s slide.

The market was watching Tuesday’s U.S. mid-term elections, whose outcome may well usher in an era of divided government in Washington that could foil big social spending plans by Democrats.

A steady climb in German bond yields weakened the dollar on expectations of further European Central Bank tightening, which cut the spread with Treasury yields, said Marc Chandler, chief market speculation at Bannockburn Global Forex.

CPI data is due to be announced on Thursday, with economists forecasting a slight decline in both the monthly and annual core numbers to 0.5% and 6.5% respectively. The easing in inflation, though, might not slow the Federal Reserve’s policy tightening that federal fund futures show will peak at 5.117% in June 2023.

Stock futures were little changed on Tuesday evening as polls began to close in the United States midterm elections.

Futures for the Dow Jones Industrial Average ticked down 44 points, or about 0.1%. S&P 500 futures dipped less than 0.1%, while Nasdaq 100 futures edged higher by less than 0.1%.

Stocks are coming off three-straight days of gains, with the Dow climbing 333 points on Tuesday for its third-straight session adding more than 1%. The bounce for equities may be partly due to the elections, where Wall Street is expecting Republicans to gain ground and create gridlock in Washington, D.C.

The market’s recent rally is occurring at the front end of a strong seasonal period. Historically, stocks tend to rise after midterm elections and the policy clarity it brings, and the final two months of the year are considered a bullish period for investors.

Oil prices edged 2% lower on Tuesday on growing worries about fuel demand as COVID-19 outbreaks worsened in top crude importer China, and jitters about the outcome of U.S. Midterm elections.

Brent futures for January delivery fell $2.34 to $95.59 a barrel, a 2.4% loss. U.S. crude fell $2.64, or 2.9%, to $89.15 per barrel.

Gold prices jumped over 2% on Tuesday to firm above the key $1,700 per ounce level, boosted by a fall in the dollar and bond yields and technical buying, while market focus remained on U.S. inflation data later this week.

Spot gold rose 2.2% to $1,711.87 per ounce Tuesday afternoon, its highest level since Oct. 7. U.S. gold futures climbed 2.08% to $1,715.1.

The pan-European Stoxx 600 closed 0.75% higher provisionally, having recouped opening losses of almost 0.5%.