Macroeconomics: The Day Ahead for 15 February

  • UK CPI and PPI to digest ahead of South Africa CPI, India Trade, and US Retail Sales, Industrial Production, NY Fed & NAHB surveys, Business Inventories; IEA Oil Market Report; Lowe and Lagarde speak; further barrage of earnings; German, US and Canada debt auctions
  • UK CPI: drop in petrol prices and seasonal discounting seen outweighing persistent food price and services pressures m/m, modest y/y fall seen leaving BoE with little choice on further rate hike
  • US Retail Sales: autos and gasoline sales seen pacing sharp headline rebound from Nov/Dec falls, core spending expected to post robust bounce
  • US Industrial Production; manufacturing expected to pace rebound, but NY Fed survey bounce to still suggest sector in contraction
  • US NAHB Housing Market Index expected to eke out further rebound on modest boost from lower rates, but sector still down in the dumps


Another busy day for statistics awaits, with UK CPI and PPI and South Korea Unemployment to digest, ahead of South Africa’s CPI, Indian Trade, and a rush of US activity data headlined by Retail Sales and Industrial Production, along with the NY Fed Manufacturing & NAHB Housing Market surveys, Business Inventories and TIC Portfolio Flows, while Canada has Existing Home, Manufacturing and Wholesale Sales. A lighter day for central bank speakers follows China’s 1-yr MTLF operation, with only RBA’s Lowe and ECB’s Lagarde scheduled, while the IEA publishes its monthly Oil Market Report and holds a joint symposium with OPEC and IEF on the oil market outlook. Another busy day for earnings has EDF, Glencore, Heineken and Mowi in Europe, while North America looks to Albemarle, AIG, Cisco, Manulife Financial Marathon Oil, Shopify and Zillow. Govt bond supply comes via way of German 25 & 29-yr, US 20-yr and Canadian 3-yr.

** U.K. – January CPI & PPI **
CPI is seen falling 0.4% m/m on the back of lower petrol prices and seasonal discounting, though with a considerable upside offset likely to come from food prices, while y/y rates for headline are expected to dip to 10.3% from 10.5% and for core to edge down to 6.2% from 6.3%. As with US CPI, there is scope for the annual reweighting of the CPI basket to have some impact. PPI data are expected to suggest only modest pipeline pressures (Output 0.1% m/m, Input 0.2% m/m), with base effects accounting for the sharp decreases in y/y rates, even if they still remain historically very high. The BoE will above all be focussed on Services (last 6.8% y/y), which remain very elevated and sticky, and all the more so given the upward pressure on basic pay seen in yesterday’s labour data.

** U.S.A. – January Retail Sales, Industrial Production, Feb NY Fed and NAHB Surveys **
After two months of contractions, both headline and the core ‘Control’ group Retail Sales measures are seen rebounding sharply at 2.0% and 0.9% m/m respectively, with the deceptively robust auto sales (mostly seasonal adjustment and price related) and a mostly price driven rise in gasoline sales pacing the headline, but also an expectation that the Cost of Living Adjustment (COLA) to social security payments will help at the core level, as well as the rebound in the ISM Services (though this will likely give more of a boost to PCE, given that Retail Sales only includes Restaurants & Bars in terms of services). It will likely underline that US consumer demand is holding up relatively well despite cost of living pressures. Manufacturing sector data takes the shape of Industrial Production and the NY Fed survey, with the former seen recovering most of December’s 0.7% m/m decline, paced by Manufacturing Output (exp. 0.8% m/m vs. Dec -1.3%), but as with expectations of better, but still contractionary readings in the February NY Fed survey, still overall pointing to lower demand, as higher rates, weaker global demand and cumulative cost and wage costs weigh on the sector. The NAHB is seen recovering a little further to 37 from January’s 35 and December’s low of 32, predicated on a recovery in Mortgage Applications, even if the recent rise in long-term rates suggests that this may prove to be rather short-lived, and demand subdued as per the various home sales indicators.

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