• MTS Economic News_20170524

    24 May 2017 | Economic News



• The dollar held firm early on Wednesday, having rebounded from 6-1/2-month lows against its major peers thanks to a rise in U.S. Treasury yields, with investor focus now turning towards the Federal Reserve's monetary policy stance. The dollar index against a basket of six currencies was steady at 97.336 after bouncing 0.4 percent the previous day.

It managed to pull away from the 96.797 level plumbed on Monday, its lowest since Nov. 9, when concerns over U.S. politics stemming from the Trump election campaign's suspected links with Russia took a toll on the greenback.

The dollar was up 0.15 percent at 111.945 yen, its highest in a week.

The euro was little changed at $1.1179, nudged away from a 6-1/2-month high of $1.1268 scaled the previous day.

• New U.S. single-family home sales tumbled from near a 9-1/2-year high in April, but the housing recovery likely remains intact amid a tightening labor market.

The Commerce Department said on Tuesday new home sales declined 11.4 percent to a seasonally adjusted annual rate of 569,00 units last month, with sales in the West region plunging to their lowest level in nearly 1-1/2 years.

March's new home sales pace was revised up to 642,000 units, which was the highest level since October 2007.

• U.S. President Donald Trump asked lawmakers on Tuesday to cut $3.6 trillion in government spending over the next decade, taking aim at healthcare and food assistance programs for the poor in an austere budget that also boosts the military.

Although it is not expected to survive on Capitol Hill, the proposal puts numbers on Trump's vision of a government that radically cuts assistance to lower-income Americans.

The biggest savings would come from cuts to the Medicaid healthcare program for the poor, which are embedded in a Republican healthcare bill passed by the House of Representatives.

• The Trump administration believes its budget plan will boost economic growth by fostering capital investment and creating jobs for workers who gave up their job hunts during tough times, Treasury Secretary Steven Mnuchin said on Tuesday.

• Moody's Investors Service on Wednesday downgraded China's credit rating to A1 from Aa3, changing its outlook to stable from negative.

• Oil prices settled a bit higher on Tuesday as expectations of an extension to OPEC-led supply cuts overshadowed a White House proposal to sell half of U.S. petroleum reserves.

Brent crude LCOc1 settled up 28 cents at $54.15 per barrel. U.S. light crude CLc1 was up 34 cents at $51.47.

• On Thursday the Organization of the Petroleum Exporting Countries (OPEC) meets in Vienna to consider whether to prolong cuts to reduce a global glut of crude. OPEC and other producing countries including Russia have cut output about 1.8 million barrels per day in the first half of 2017.

• OPEC's de facto leader, Saudi Arabia, favors extending the output curbs by nine months rather than the initially planned six months, hoping to drain the crude glut and keep oil prices at or above $50 per barrel.

• President Donald Trump's proposal to sell half of the U.S. strategic oil reserve highlights a decline in the biggest oil user's reliance on imports - and a weaning off OPEC crude - as its domestic production soars.

The U.S. Strategic Petroleum Reserve (SPR) SPR-STK-T-EIA, the world's largest, holds about 688 million barrels of crude in heavily guarded underground caverns in Louisiana and Texas.

The White House budget, delivered to Congress on Tuesday, proposes to start selling SPR oil in fiscal 2018, which begins on Oct. 1. Under the proposal, the sales would generate $500 million in the first year and gradually rise over the following years.

• Islamic State claims responsibility for Manchester arena attack

• President Rodrigo Duterte of the Philippines placed the southern island of Mindanao under martial law on Tuesday after armed men belonging to two terrorist groups affiliated with the Islamic State killed a police officer and two soldiers, officials said.

The Islamist groups reportedly took over the Amai Pakpak Medical Center, hoisting the black banner of the Islamic State above the hospital.

Reference: Reuters, Wall Street Journal

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