Macro Roundup (May 29)

SHANGHAI, May 29 (SMM) – This is a roundup of global macroeconomic news last night and what is expected in the day ahead.

The US dollar fell to a two-month trough against a basket of currencies on Thursday as risk appetite improved with a massive EU stimulus plan and fresh US unemployment data offsetting concerns over rising US-China tensions.

The US Labor Department said Thursday another 2.1 million Americans filed for unemployment benefits last week, slightly higher than estimates. But the pace of new filings has dropped from previous weeks, signaling that the worst of the economic damage from the coronavirus pandemic may be over.

The European Commission’s unveiling on Wednesday of plans for a 750 billion euro ($826.5 billion) recovery fund, meanwhile, continued to support market sentiment.

US President Donald Trump said Thursday afternoon he would give a news conference Friday regarding China, knocking US stocks down from solid gains. That announcement came after China approved a national security bill for Hong Kong on Thursday.

Tensions between Washington and Beijing have risen lately, with trade, the coronavirus pandemic and now Hong Kong a focus in the dispute.

Oil futures also shrugged off concerns over US-China tension and rose on Thursday, on signs that US gasoline demand is rising despite a big surprise build in crude inventories.

The US Energy Information Administration (EIA) said crude inventories rose 7.9 million barrels in the latest week, exceeding expectations, due to a big increase in imports. Gasoline stockpiles fell unexpectedly, but refiners boosted output.

LME nonferrous metals, except for lead, closed higher on Thursday, with copper advancing 1.4% to lead the way up. Tin rose 1.2%, nickel climbed 0.8%, aluminium gained 0.6% and zinc inched up 0.2%.

SHFE nonferrous metals performed similarly overnight. Tin rose close to 1%, copper crept up 0.8%, zinc advanced 0.7%, aluminium gained 0.4% and nickel edged up 0.2%, while lead shed 0.3%.

The US Commerce Department Thursday reported that gross domestic product (GDP), the broadest measure of economic health of the world’s largest economy, fell at an annual rate of 5% in the first quarter, a bigger decline than the 4.8% drop first estimated a month ago.

It was the biggest quarterly decline since an 8.4% fall in the fourth quarter of 2008 during the depths of the financial crisis, and economists expect a far worse outcome in the current April-June quarter.

US personal spending and personal consumption expenditures (PCE) price index, wholesale inventories for April, and Chicago purchasing mangers’ index (PMI) and the University of Michigan’s consumer sentiment index for May are slated for release Friday.

In Europe, survey data from the European Commission showed that eurozone economic confidence improved in May after the record declines of March and April, signaling early signs of recovery.

The economic sentiment index rose to 67.5 in May from 64.9 in the previous month. However, the reading was below economists' forecast of 70.3.

Meanwhile, services confidence continued declining, albeit at a lower rate than in the preceding two months. Changes in construction and retail trade confidence were much more contained, survey results showed.

The consumer sentiment index came in at -18.8 versus -22.0 in the previous month. The reading matched the preliminary estimate.

Preliminary data from Destatis revealed German consumer price inflation eased to the lowest since 2016. Consumer price inflation slowed to 0.6% in May from 0.9% in April. On a monthly basis, consumer prices dropped 0.1% in May, as expected.

The eurozone’s consumer inflation data for May and Germany’s retail sales numbers for April are due Friday.