Macroeconomics: The Day Ahead – 28 January 2021

Good Morning: The Long & the Short of it and The Bigger Picture

Written by Marc Ostwald, ADMISI’s Global Strategist & Chief Economist

  • US Q4 GDP in focus, digesting FOMC, Japan Retail Sales, Philippines GDP; Also awaiting German CPI; US weekly jobless claims, Goods Trade, New Home Sales & Wholesale Inventories; OECD conference on digital taxation, ECB  & BoE speakers; plenty of corporate earnings; Italy, US & Canada bond auctions
  • Germany CPI: VAT cut expiry and petrol prices to pace sharp rebound, but still very subdued; unseasonal patterns increase risk of outlier
  • US Q4 GDP: reasonably solid expansion seen after sharp Q2/Q3 swings; Fixed Investment, Inventories & Personal Consumption seen pacing gain, Net exports likely a big drag; very wide range of forecasts
  • US jobless claims: expected to dip but remain well above November levels


As expected, there was little to excite markets from the FOMC meeting, and while today has a busy run of data and events, politics and pandemic related news will continue to rule the roost. Topping the statistical agenda is the advance reading of US Q4 GDP, accompanied by weekly jobless claims, Goods Trade Balance and New Home Sales, while elsewhere there are Japan’s Retail Sales and Philippines Q4 GDP to digest, while Europe sees a swathe of national and Eurozone confidence surveys ahead of German January CPI. On the events side of the equation there are both ECB and BoE speakers, but perhaps the most interesting event of the day will be OECD panel on “Tax Challenges Arising from Digitalisation and the Future of International Taxation”, which features finance ministers from the UK, Germany, Italy and Canada. The govt bond auction schedule has Italian 5 & 10-yr, US 7-yr and Canadian 10-yr sales. There are plenty more corporate earnings in Asia, Europe and the US with Samsung Electronics, Samsung SDI, Tokyo Electron and ST Microelectronics of particular note given supply bottlenecks in the semiconductor sector. Altria, Mastercard, McDonalds, Mondelez, Pulte Group, US Steel, Visa, Western Digital and Xilinx are likely to be among the headline grabbers in the U.S. But the focus will be on whether equity markets can find a more stable footing after yesterday’s sell-off, which also saw the VIX volatility index surge 14.2 ppts to 37.2%, with stop loss selling (due to short squeezes) providing the trigger, and with month end flows also coming into the equation.


This week’s Investing Channel video takes a look at commodity prices and the impact of supply disruptions – click here to view.


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