The Week Ahead
This morning, we have eurozone CPI and Germany IFO and we will hear from the BoE’s Lombardelli, Ramsden, and Dhingra on Monday. Germany GDP and US consumer confidence are due on Tuesday. Central bank chatter includes: the ECB’s Nagel, Schnabel and Pill, and Fed’s Logan, Barr and Barkin. Nvidia earnings will likely take centre stage on Wednesday, and we have the US new homes sales print, and comments from the Fed’s Bostic, on the economic outlook, and the BoE’s Dhingra. US GDP, durable goods and initial jobless claims follow on Thursday, we also have the ECB’s policy minutes, and chatter from the Fed’s Schmidt, Hammock and Harker. Inflation prints from key European countries will garner market attention on Friday morning, and later we have US PCE inflation and income and spending figures which may shed some more colour on the state of the US consumers, whose resilience was called to question last week.
Following the weaker-than-expected retail sales figures, disappointing Walmart forecasts and the Uni. of Michigan prints, markets had a broadly risk-off week. The Uni. of Michigan consumer sentiment reading for February declined further to 64.7, while inflation expectations skyrocketed, with the 5-10 year figure to the highest level since 1995 at 3.5%. The preliminary S&P Global US services PMI also shocked, falling into contraction, to 49.7, versus expectations of 53. The yield on the 10-year UST closed 5bps stronger, closing at 4.43% on the week. Meanwhile, the S&P Index fell 1.66%. The dollar also closed marginally lower, for the third-straight week. Brent crude closed 0.41% lower on the week amid the prospect of Iraq increasing oil flow.
Elsewhere, China's tech stocks rallied following President Xi's meeting with private entrepreneurs and new supportive policies, while the country's yield curve flattened due to rising short-term rates. The People's Bank of China maintained its Loan Prime Rates despite persistent disinflation risks, though housing prices showed signs of recovery, particularly in tier-one cities. Meanwhile, US-China tensions escalated with the White House's new 'America First Investment Policy,' which primarily targets Chinese investments and threatens to suspend the 1984 US-China Income Tax Convention.
If you would like to receive The Daily Update to your inbox, please email markets@epicip.com or click the link below.