Chair Powell spoke post the FOMC decision, emphasising the road to a normal economy remains a long way off. ECB speakers emphasised that rate cuts were still possible, focusing the markets eye on the strength of the Euro. With many G10 central banks close to their reversal rate (lower bound), jawboning their currencies lower might become the next and only game in town.
North America
US: The FOMC left interest rates unchanged. January activity data was weaker, Dallas Fed +7 (12 exp., 9.7 rev.) and the Conference Board Confidence measures were mixed. Inflation, as measured by the December Core PCE Deflator, showed unexpected strength, rising to +0.3% MoM (0.1% exp., 0.0% rev.) and +1.5% YoY (1.3% exp., 1.4% rev.)
Canada: Monthly GDP bounced to +0.7% MoM (0.4% exp., 0.4% rev.), -2.8% YoY (-3.2% exp., -3.5% rev.)
Europe
Eurozone: January Economic Confidence defied expectations and ticked higher to 91.5 (89.6 exp., 90.4 rev.)
French December Consumer Spending bounced back to +23.0% MoM (23.7% exp., -18.9% rev.) and +3.7% YoY (3.4% exp., -17.1% rev.) with Q4 GDP printing at -1.3% QoQ (-4.0% exp., 18.7% rev.), -5.0% YoY (-7.6% exp., -3.9% rev.) German January IFO ticked a little lower across all measures and the Jan CPI (Harmonized) exploded, by European standards, to +1.4% MoM (0.3% exp., 0.6% rev.) bringing the YoY measure to +1.6% (0.5% exp., -0.7% rev.) Unemployment was stable, at +6.0% (6.1% exp., 6.1% rev.) and Q4 GDP was a little stronger +0.1% QoQ (0.0% exp., 8.5% rev.) and -3.9% YoY (-4.0% exp., -4.0% rev.) Italian consumer and manufacturing confidence was very slightly lower.
Sweden: Swedish December Unemployment Rate rose to +8.7% (8.6% exp., 8.3% rev.) and Retail Sales dropped -4.9% MoM (-1.0% exp., 0.8% rev.) however January data showed some resilience with Consumer Confidence stable and Manufacturing Confidence moving higher.
Norway: Norwegian November unemployment numbers continued to improve with the Unemployment Rate (AKU) 5.0% (5.2% exp., 5.2% rev.) However, economic restrictions still pushed December Retail Sales to -5.7% MoM (-0.6% exp., 2.9% rev.)
Japan
December Industrial Production weakened to -1.6% MoM (-1.5% exp., -0.5% rev.) and -3.2% YoY (-3.1% exp., -3.9% rev.). December Retail Sales were negative, but slightly better than expected, the Jobless Rate was better at +2.9% (3.0% exp., 2.9% rev.) and January Consumer Confidence ticked higher. January Tokyo CPI Ex-Fresh Food, Energy was better than anticipated at +0.2% YoY (0.0% exp., -0.4% rev.)
UK
November Unemployment Rate +5.0% (5.1% exp., 4.9% rev.)
Australasia
Australia: Inflation in Australia was stable with the 4Q Trimmed Mean at +0.4% QoQ (0.4% exp., 0.4% rev.) and +1.2% YoY (1.1% exp., 1.2% rev.)
New Zealand: No tier 1 data.
For further information on the Pacific G10 Macro Rates team, their experience and strategy please see below
