Macroeconomics: The Day Ahead for 22 February

  • Modest schedule has lower than expected Australia Wages, hawkish RBNZ, soft Japan Services PPI and better than expected France Business confidence to digest as German Ifo survey and FOMC minutes awaited; Rio Tinto heads busy run of miner earnings; a few central bank speakers; Italy, Germany, UK and US bond auctions
  • Ifo survey: improving outlook seen pacing further uptick, Services PMI likely skewing expectations to the upside, though Manufacturing PMI fall casts some doubt
  • FOMC minutes rather historical in light of CPI, Retail Sales and PMIs, but scale of hawkish dissent among non-voters of interest


It will be a relatively light and heavily front loaded day in statistical terms, with Australian Q4 Wages, French Business Confidence, German CPI and the as expected hawkish RBNZ rate decision to digest, ahead of the German Ifo survey. The February FOMC minutes are accompanied by BoJ, Fed and Riksbank speakers, while a busy day for govt bond supply has German 10-yr, UK 30-yr, Italian 2-yr and I-L along with US 5-yr and 2-yr FRN. Rio Tinto tops a busy run of miner earnings, with AMG, Fresenuis Medical care, Lloyds Bank, Pirelli, Stellantis and Wienerberger also due, while the US looks to Mosaic, Nvidia and TJX. There is also the first of this week’s US Livestock & Dairy reports on Milk Production and Poultry Slaughter. Markets will however likely be navel gazing following on from the sharp fall in equities yesterday, as rate expectations are once again ratcheted higher, above all in terms of how long they will remain restrictive, and Putin once again threatened to use nuclear weapons in his state of the nation speech.

** Germany – Feb Ifo Business Climate **

The IFO Business Climate is expected to rise to 91.2 from 90.2, with a rise in Expectations (forecast 88.2 vs. 86.2) seen outpacing an improvement in the Current Assessment (exp. 95.0), and the better than expected Services PMI likely skewing expectations to the upside. That said the relative setback in the Manufacturing PMI (46.5 vs. Jan 47.3) suggests caution is warranted, especially as the Ifo and PMIs quite often diverge in month-to-month terms, with the uptick in France’s Manufacturing Confidence (104 vs. expected unchanged 103) contrasting with Manufacturing PMI sliding to 47.9 from 50.5.

** U.S.A. – FOMC Minutes **

The February FOMC minutes will highlight that despite a unanimous vote for a 25 bps, non-voting members such as Bullard and Mester and perhaps others actually favoured a 50 bps hike. Thus the discussion and views on the pace of policy transmission and the implications for the terminal rate will be of particular note, along with the discussion on ‘disinflation’, the rather more hopeful run of economic data and the easing of financial conditions, about which Powell surprisingly appeared to be rather indifferent to at the press conference. But given the rebound in CPI and yesterday’s run of better than expected PMIs that render the minutes historical, it will be the run of Fed speakers this week which will be more instructive.

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