Macro Roundup (Mar 12)

SHANGHAI, Mar 12 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar fell to a one-week low on Thursday as the European Central Bank said it would keep a lid on borrowing costs and an auction of 30-year Treasury bonds was met with sufficient demand to help stabilize yields, giving a boost to riskier assets.

The ECB said it was ready to accelerate money-printing to keep eurozone yields down, signaling to skeptical markets it was determined to lay the foundation for a solid economic recovery.

In the United States, the response to the Treasury auction, which followed 3-year and 10-year auctions earlier in the week, helped allay concerns about investors’ ability to absorb an increase in debt needed to finance the response to the pandemic.

“We’ve had a series of good news this week as far as the Treasury auctions are concerned and certainly the ECB delivered a little bit more than what we were expecting as far as being a little bit more dovish and try to up its purchases,” said Mazen Issa, senior FX strategist at TD Securities.

“It’s a signal that we may be looking at a fairly significant tailwind behind risky asset prices.”

On Wall Street, futures contracts tied to the major U.S. stock indexes rose Thursday evening just hours after the S&P 500 closed at a record high and President Joe Biden signed landmark stimulus legislation.

Dow futures added 65 points and suggested a gain of a similar magnitude when regular trading resumes on Friday. Nasdaq 100 and S&P 500 futures both added about 0.2%.

US stocks climbed to record highs during Thursday’s regular session as a rebound in tech shares resumed and Biden’s $1.9 trillion Covid-19 relief package became law. The S&P 500 jumped 1% and hit a new closing high, surpassing its previous record from Feb. 16.

The Dow Jones Industrial Average, the relative laggard, finished up 188.57 points after rallying more than 300 points earlier in the session to an intraday record.

“While we expect conditions to remain volatile, the most recent developments on three of the main market drivers—stimulus, pandemic news, and inflation data— point to further equity upside,” wrote Mark Haefele, chief investment officer at UBS Global Wealth Management.

Crude oil prices rose on Thursday as vaccine rollouts bolstered the economic outlook and U.S. fuel stocks fell sharply, although gains were capped by a surge in crude oil inventories after last month’s Texas storm.

Brent crude oil futures for May rose $1.59, or 2.34%, to $69.46 per barrel, while U.S. West Texas Intermediate crude for April settled 2.45%, or $1.58, higher at $66.02 per barrel.

“Gasoline stocks fell... (which) provided the bullish offset and eventually sent oil prices higher on the strong demand for end products, hence an economic recovery,” said Stephen Innes, Chief Global Markets Strategist at Axi.

“Given the powerful signals from the U.S. re-opening narrative, it still suggests that the path of least resistance for oil prices is higher.“

U.S. gasoline stocks fell by 11.9 million barrels in the week to March 5 to 231.6 million barrels, the Energy Information Administration (EIA) said, compared with expectations for a 3.5 million-barrel drop.

Gold eased off a one-week high on Thursday after U.S. Treasury yields rose after better-than-expected jobless claims data.

Spot gold fell 0.1% to $1,725.00 per ounce by 1:57 p.m EST (1856 GMT), after hitting its highest since March 3 at $1,739.63 earlier.

US gold futures settled little changed at $1,722.60.

“10-year Treasury yields have now bounced again, which has stabilized the dollar and is taking some air out of gold,” said Tai Wong, a trader at investment bank BMO in New York.

“We may have seen short-term lows at $1,680 per ounce, but a higher-yield environment is likely to prevent a significant rally; Perhaps a $1,700-$1,800 range in the near term as market tries to find equilibrium in yields.”

Data showed the number of Americans filing new claims for jobless benefits dropped to a four-month low last week.

Germany February CPI annual rate final value, US February PPI annual rate and preliminary value of the University of Michigan's consumer sentiment for the US will be released today.