Macroeconomics: The Day Ahead – 13 January 2021
Good Morning: The Long & the Short of it and The Bigger Picture
Written by Marc Ostwald, ADMISI’s Global Strategist & Chief Economist
- Top ECB and Fed speakers dominate schedule; digesting Australia & S. Korea jobs data, awaiting Eurozone Industrial Production, US CPI and Fed Beige Book; busy run of govt bond sales; UK PM Johnson testimony
- US CPI: headline to be boosted m/m by gasoline, core subdued by shelter & housing; y/y rates to continue to offer Fed plenty of room in AIT terms
- Fed Beige Book: focus on outlooks for hiring and overall activity; NFIB survey suggests less optimistic turn; survey timing effects
Today’s schedule differs little from Tuesday, with central bank speakers front and centre – most notably Lagarde, Brainard & Clarida; while the data schedule features US CPI and Treasury Budget, along with Eurozone & Italian Industrial Production, and the Fed’s Beige Book, and there is also the overnight news on much better Australian job vacancies, and by contrast a surge in Unemployment in South Korea to digest. The scheduled political highlight will be UK PM Johnson’s testimony to Parliament’s Liaison Committee, which will doubtless be far less candid and honest about the UK’s pandemic situation than Chancellor Merkel’s admission yesterday that maximum lockdown measures in Germany may well have to be extended until Easter (early April), given the need to contain the latest more virulent Covid-19 variants.
U.S.A. – December CPI / Fed Beige Book
The simplest observation on today’s CPI is that in y/y terms at an expected 1.3% headline and 1.6% core, it will be another month that is below target, and in an AIT (average inflation target) environment only adding to ‘lower for longer’. In m/m terms headline terms, Gasoline prices were up by nearly 4.0% on the month, in contrast to what would normally be seasonal fall of ca. 3.0%, and this will be the key contributor to an expected overall rise of 0.4%; by contrast shelter/OER will weigh heavily on core, which is seen up by just 0.1% m/m. There will likely be small pockets of supply disruption price pressures, but of little consequence relative to the aforementioned heavily weighted items. While there is a political bias in the survey base for the NFIB Small Business Optimism (heavily Republican), which may well have accounted for the sharp drop on the economic outlook and future sales, it is likely that this downturn in outlook optimism will find an echo in today’s Beige Book. While there may have been offset from the end December fiscal package, this will have been modest, with many responses pre-dating the passage of that bill. Indeed uncertainty about the Georgia run-offs, rising infection rates and vaccine distribution will also likely have weighed quite heavily on business outlooks, and this was also evident in the JOLTS Job Openings report fall yesterday, which was modest, but widespread.
To view the full report and to sign up for daily market commentary please email firstname.lastname@example.org
The information within this publication has been compiled for general purposes only. Although every attempt has been made to ensure the accuracy of the information, ADM Investor Services International Limited (ADMISI) assumes no responsibility for any errors or omissions and will not update it. The views in this publication reflect solely those of the authors and not necessarily those of ADMISI or its affiliated institutions. This publication and information herein should not be considered investment advice nor an offer to sell or an invitation to invest in any products mentioned by ADMISI.
© 2021 ADM Investor Services International Limited.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2024 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.