Macro Roundup (Jun 11)

SHANGHAI, Jun 11 (SMM) – This is a roundup of global macroeconomic news last night and what is expected in the day ahead.

The US dollar extended losses on Wednesday, falling to a fresh three-month low against a basket of major currencies after the Federal Reserve made no policy changes, as expected.

The Fed kept interest rates near zero and indicated that’s where they’ll stay as the economy recovers from the coronavirus pandemic.

“We’re not thinking about raising rates. We’re not even thinking about thinking about raising rates,” Fed Chairman Jerome Powell said. “What we’re thinking about is providing support for the economy. We think this is going to take some time.”

Overnight, LME and SHFE base metals closed higher for the most part. LME copper led the gains with a rise of 2.38%. Tin climbed 1.83%, nickel added 0.77%, aluminium rose 1.5%, zinc went up 0.59%, while lead shed 0.97%.

SHFE copper rallied 1.8%, aluminium grew 1.1%, zinc increased 0.79%, nickel climbed 0.19%, tin expanded 0.32%, while lead eased 0.42%. Stainless steel rose 0.12% while rebar slipped 0.39%.

On the data front, China's consumer inflation continued to moderate in May, with the consumer price index (CPI) rising 2.4% year on year, compared with a 3.3% rise in April. The increase in CPI was the slowest in 14 months. 

Pork-price inflation in China continued to ease in May. Pork prices grew 81.7%, slowing from a 96.9% increase in April. Pork prices boosted headline CPI by around 1.98 percentage points.

China’s producer price index (PPI) fell 3.7% from a year earlier in May, according to data from the country’s National Bureau of Statistics. The decline was the steepest in more than four years, as prices of commodities and other industrial products softened amid the coronavirus pandemic.

China's newly-added social financing, a measurement of funds the real economy receives from the financial system, came in at 3.19 trillion yuan in May, up 1.48 trillion yuan from a year ago, central bank data showed Wednesday.

The M2, a broad measure of money supply that covers cash in circulation and all deposits, rose by 11.1% year on year to 210.02 trillion yuan at the end of May, PBOC data showed.

The growth rate was unchanged from that seen at end-April, and up 2.6 percentage points compared with the same period last year.

Increased issuance of government bonds, together with banks' efforts to channel more lending to the manufacturing industry, contributed to the expansion of new yuan loans last month, said Zhang Yu, analyst with Hua Chuang Securities.

US consumer prices fell for a third consecutive month in May and underlying inflation was weak as demand remained sluggish amid a recession caused by the COVID-19 pandemic.

The Labor Department said on Wednesday the US CPI dipped 0.1% last month after falling 0.8% in April, which was the largest decline since December 2008.

Excluding the volatile food and energy components, the CPI slipped 0.1% in May after dipping 0.4% in April, the largest drop since the series started in 1957. The so-called core CPI fell in March for the first time since January 2010.

Crude oil prices accelerated their declines on Wednesday after the Energy Information Administration (EIA) reported a rise in US crude oil inventories of 5.72 million barrels for the week ended June 5. The reading came in much higher than the expectations for a decrease of 1.01 million barrels.

The American Petroleum Institute on Tuesday had reported a climb of 8.42 million barrels in crude inventories, according to sources.

Key economic data slated for release today include the US weekly unemployment claims and its PPI for May.