Macro Roundup (Dec 23)

SHANGHAI, Dec 23 (SMM) – This is a roundup of global macroeconomic news last weekend and what is expected in the day ahead.

Last weekend

The US dollar recorded its best week since early November on the back of a series of strong US economic data that reduced the likelihood of a near-term cut in interest rates. 

US growth nudged up in the third quarter, the government confirmed on Friday, and there are signs the economy maintained the moderate pace of expansion as the year ended, supported by a strong labour market.

The dollar index, which tracks the greenback against a basket of other currencies, rose 0.3% on the day and finished at 97.68 last Friday.

LME base metals and the SHFE complex increased for the most part. LME aluminium gained 0.06%, zinc rose 0.82%, nickel advanced 2.04%, tin grew 0.06%, lead added 1.07%, while copper shed 0.69%. 

SHFE aluminium gained 0.39%, zinc climbed 0.11%, lead rose 1.3%, nickel grew 1.5%, tin went flat, while copper lost 0.51%.

Gross domestic product increased at a 2.1% annualised rate in the third quarter, the Commerce Department said last Friday. That was unrevised from November’s estimate in line with economists’ expectations. The economy grew at a 2% pace in the April-June period.

Consumer spending, which accounts for more than two-thirds of US economic output, increased at a 3.2% annual rate in the third quarter, compared with a prior estimate of 2.9%. 

There were also upgrades to business spending on nonresidential structures such as power infrastructure, which limited the drop in overall business investment. That offset downward revisions to investment in homebuilding and inventory accumulation. 

Imports, which are a drag to GDP growth, were higher than previously estimated.

The US core personal consumption expenditures (PCE) price index, the Federal Reserve preferred gauge of inflation, ticked down to 1.6% on a yearly basis in November from 1.7% in October and came in line with the market expectation. On a monthly basis, the core PCE price index remained steady at 0.1%.

Further details of the publication revealed that personal income in the same period increased by 0.5% to beat analysts' estimate for an increase of 0.3% while personal spending rose to 0.4% from 0.3%.

Consumer sentiment in the US improved by slightly more than initially estimated in the month of December, according to a report released by the University of Michigan on Friday.

The report said the consumer sentiment index for December was upwardly revised to 99.3 from the preliminary reading of 99.2, compared to the final November reading of 96.8. Economists had expected the index to be unrevised.

"Most of the December gain was among upper income households, with those in the top third of the income distribution gaining 7.5% from last month and those in the bottom two-thirds posting a gain of just 0.8%," said Surveys of Consumers chief economist Richard Curtin.

In Germany, the GfK German consumer climate index fell from 9.7 to 9.6, with both economic and income expectations weighing, while propensity to buy increased. In spite of negative views towards the economy, the willingness to continue spending will be key for the European Central Bank.

For the Eurozone, the consumer confidence indicator fell from -7.2 to -8.0 in December, reversing gains from November. In spite of the decline, the indicator remained above the long-term average of -10.6. It was the lowest reading since January, however, when the indicator sat at -8.3%.

Day ahead

Key economic data slated for release today include the US new home sales and durable goods orders for November, as well as German import price index for November.