Macroeconomics: The Day Ahead for 31 January

  • Busy end to the week and month in statistical terms, though focus likely on US tariffs on Canada and Mexico; digesting Japan inflation and activity data, UK Lloyds Business Barometer, France CPI; awaiting German jobs and CPI, Canada monthly GDP, US Q4 ECI, Personal Income/PCE and Chicago PMI; a few cen. bank speakers; Samsung, Chevron & Exxon Mobil top earnings
  • Germany/France HICP: upward pressure from energy price base effects and fuel prices likely to be negated by ongoing deceleration in services, no bar to further ECB rate cuts
  • USA: Q4 ECI expected to tick up modestly, echoing Average Earnings and Atlanta Fed Wage tracker, not really a key Fed concern
  • USA: Q4 GDP data points to stronger than expected PCE spending, core PCE deflator seen in line with Fed target; but all very historical as Fed awaits Trump 2.0 agenda implementation impact to guide rate outlook]]

EVENTS PREVIEW

The week and month end with a blast of economic data, earnings from Samsung Electronics and US Big Oil,  a smattering of central bank speakers and an expected 25 bps rate cut in Colombia, with one eye on whether the Trump administration applies the 25% trade tariffs on Canada and Mexico as of tomorrow that it has said it would – details of what products are hit with tariffs will be critical, with some debate within the administration about whether oil will be included. There are Japan’s Tokyo CPI, Retail Sales & Industrial Production (raising speculation about a further BoJ hike in March), UK Lloyds Business Barometer (echoing other downbeat surveys this week), German Retail Sales (much weaker than expected, but this is a highly erratic and unreliable data series) and French HICP to digest. Ahead lie German Unemployment and HICP, Canada’s monthly GDP for November, and US Q4 Employment Cost Index, Personal Income/PCE and Chicago PMI. Next week has a very familiar feel in statistical terms, with the array of Manufacturing and Services PMIs dominating the start of the week, while US labour market statistics (JOLTS, Payrolls, ADP, Non-farm Productivity) feature in the latter half of the week, along with German Orders, Production and Trade, Japan Wages and Household Spending. The BoE is expected to cut rates by 25 bps to 4.50%, while India will look to tomorrow’s Budget and next Friday’s much anticipated RBI rate cut (expected -25 bps to 6.25%), with plenty of Fed and ECB speakers also scheduled. The US Q4 corporate earnings season reaches its speak with more than 120 S&P 500 companies reporting and a very busy schedule of earnings in Asia and Europe.

** France / Germany – January HICP **

– Following on from the flatline in Q4 GDP, and an ECB policy meeting which offered little in the way of fresh insights into the policy outlook, other than to reaffirm data dependency, noting headwinds (i.e. risks) to growth, though still expecting a recovery, a good deal of general uncertainty, and still viewing disinflation as ‘well on track’ despite sticky though decelerating Services CPI, today’s French and German inflation readings will refine if necessary expectations for Monday’s Eurozone HICP. The current consensus looks for a seasonally typical drop of -0.3% m/m, which would edge the y/y up 0.1 ppt to 2.5%, though core is seen edging 0.1 ppt lower to 2.6%. France’s CPI and HICP while seeing some upward pressure from energy prices (both base effect and fuel price related), saw services inflation ease, a pattern which may well be echoed by the German data later, and this will likely offset the stronger than expected Spanish HICP.

** U.S.A. – Q4 ECI, December Personal Income & PCE **

– The Q4 Employment Cost Index is forecast to edge up to 0.9% q/q from Q3’s 0.8%, predicated on the higher outturn for Average Hourly Earnings over the quarter, and also in line with the Atlanta Wage Tracker Index, with base effects dictating an expected dip in the y/y rate to 3.8%. The Fed is clearly more concerned, or rather focussed on labour demand at the current juncture than wage pressures, which are running only modestly higher than pre-pandemic levels, and to an extent reassuring for the Fed given a still relatively tight labour market. Yesterday’s much stronger than expected 4.2% q/q SAAR rise in Q4 Personal Consumption largely pre-empts today’s monthly PCE readings, which will almost certainly beat the consensus of 0.5% m/m (barring upward revisions to prior months). The accompanying PCE deflators are expected to show headline up 0.3% m/m to push the y/y up 0.2 ppt to 2.6%, while core is forecast to rise a very average 0.2% m/m to leave the y/y unchanged at 2.8% y/y, though the 3-mth annualized rate would edge down to 2.3%. But all of this is very historical already, with the Fed now sitting on the sidelines and waiting to see the impact of whatever fiscal, trade and other legislative measures are deployed under Trump 2.0.

To view the full report and to sign up for daily market commentary please email admisi@admisi.com

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.

© 2025 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.

Latest News & Market Commentary

Explore the latest edition of The Ghost in the Machine

Explore Now