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FED’s POWELL TESTIMONY

Fed chair Jerome Powell in his testimony to US Senators mentioned that the Fed’s patient stance on rates was due to “cross currents and conflicting signals.” Powell emphasised that the Fed would continue to wait for more data and was “in no rush” to make judgements on policy direction. Powell’s commentary on rates sounded neutral and it seems the Fed narrative has shifted now to the B/S from rates, though there may be another rate hike in the offing before the rate cycle peaks out

U.S. GDP

Amid a barrage of weak data in the closing months of 2018, including retail sales, industrial production, durable goods orders, home sales and construction, a majority of analysts materially trimmed estimates for GDP growth. BUT GDP handily topped expectations However, this good news is superficial as it masks a massive and troubling inventory build in the second half of last year

Yet despite the headline beat, personal consumption disappointed, and after rising at a 3.5% rate in Q3, in Q4 it rose just 2.8%, missing expectations of 3.0%

CHINESE PMI MUNUFACTURING

The manufacturing PMI fell to 49.2 from 49.5 in January. While this was below the consensus forecast (which was for no change)

There are encouraging signs. New orders and business expectations showed notable increases, suggesting some impact of supportive policy and less encouraging, though, is a large drop in the forward-looking indicator of exports – the new export orders component in the PMI data

source: Bloomberg

Important News

  • The Italian youth unemployment increases to 33%, surpassing Spain
  • President Trump and North Korean leader Kim Jong Un failed to reach a denuclearisation agreement, cutting short their second summit. Although the two leaders were said to have held “very good and constructive meetings” at Hanoi, lunch and a signing ceremony were cancelled

source: Bloomberg

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