Macroeconomics: The Day Ahead for 9 February

  • Central banks still front and centre on slightly busier day for data, very busy day for corporate earnings; digesting UK RICS survey, German provisional CPI, awaiting US weekly jobless claims, Brazil & Mexico inflation; US 30-yr auction
  • Germany CPI lower than expected on energy subsidy changes, but higher than assumed in preliminary Eurozone data; lack of detail on basket changes and breakdown of changes advises against over extrapolation
  • EU Summit: Green Deal Industrial Plan and Ukraine top the agenda, deep divisions on energy and budgets likely to rear their ugly head again
  • ADM IS WASDE review: ADM IS WASDE Summary attached 


There are at least some data points which will grab market attention today, via way of the overnight UK RICS House Price Balance and delayed German CPI, with US weekly jobless claims and Brazil and Mexican inflation ahead. But central bank speakers and rate decision will again likely rule the roost, with the as expected Riksbank 50 bps rate hike, testimony from the BoE on last week’s monetary policy report, and rate decisions in Romania, Serbia, Mexico and Peru. Earnings are more than plentiful with Asia running the ruler over Inpex, Nippon Steel, NT&T, Nissan, Toyota and Tokyo Electron. Europe looks to AstraZeneca, BAT, Credit Suisse, Siemens, Unilever, Volvo and Zurich Insurance, while the US has results from Avaya, Expedia, Hilton Worldwide, Kellogg, Paypal, Pepsico, Tapestry and Warner Music. There are also weekly EIA Gas Inventories and the US completes its quarterly refunding with £21.0 Bln of 30-yr. Last but not least the EU’s special 2-day summit begins, with the EC’s proposed Green Deal Industrial Plan, a counter to the US Inflation Reduction Act the primary point of discussion along with the war in Ukraine and the Ukraine’s ambitions to join the EU. The divisions within the EU on Energy policy and on national budget policies will likely be all too evident.

** Germany – January CPI **
Both CPI and HICP were better than expected in y/y terms, with HICP much weaker than expected in m/m terms at 0.5% against forecasts of 1.3%, but the rise is still some 0.5 ppt higher than had been assumed in the preliminary Eurozone CPI data, which will result in an upward revision, though probably not as much as many economists had been assuming. Given the changes in weightings in the CPI basket (with no breakdown published), and the impact of numerous adjustments to govt subsidies for household energy (as was the case in many other Eurozone countries), it would be unwise to over-extrapolate about underlying trends. The fact remains that the energy measures are essentially a lot of noise, which will persist for much of the year, but the ECB’s primary concerns will be the core measures, above all the ‘core core’ measure, which in contrast to the headline reading may show little or no improvement from a very high and ‘sticky’ 7.0% y/y in December, in other words the hawkish ECB rhetoric is not going to change in the short-term.

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