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U.S. CPI

The January CPI report provides a whiff of the inflation trajectory for 2019. Analysts should not be overly sanguine toward the soft headline print, which was largely attributable to sagging gasoline prices. Instead, they should be cognizant of a nascent acceleration bias in the core

That scenario will put Fed hikes back on the table, possibly as early as the third quarter of this year. Labor scarcity appears to have finally intensified to a degree that is boosting prices pressures. Meanwhile, goods inflation remains constrained by residual dollar strength from last year

JAPAN GDP

A bounce in capex was to be expected after a dip in 3Q — and it registered in line with analysts’ estimate. More important is how durable the spending by businesses will be going forward. Strength in private investment that helped drive a sharp rebound in Japan’s 4Q GDP could fade somewhat in coming quarters

Weakness in Europe, and China’s slowdown are concerns, with potential to damp Japan’s exports and growth this year. The outcome of U.S.-China trade talks will also be pivotal, given the stakes for supply-chain demand

EUROZONE GDP

Eurostat has confirmed that the euro-area economy expanded by a meager 0.2% in 4Q. If sustained at this speed, growth would be too slow to keep the labor market tightening and inflation rising – a big problem for the ECB

By the way, according to some analysts there are good reasons to expect acceleration –
much of the weakness reflects idiosyncratic (such as Yellow Vest in France) shocks and there is nascent evidence that confidence is stabilizing

source: Bloomberg

Important News

  • President Donald Trump has received the findings of a probe into whether imported vehicles pose a national security threat, which could lead the U.S. to impose tariffs
  • ECB’s Coeure (neutral) confirms that the economic slowdown is stronger and broader than what they expected, warning that the inflation path will be shallower, and adding that a new TLTRO is possible and the ECB are currently discussing it
  • President Trump said on Tuesday that he could potentially envisage extending the 1 March deadline for the US-Sino trade talks, should they be getting close to a deal, but added that he preferred not to do so. He also said that he is expecting to meet Chinese Premier Xi Jinping soon to finalise the deal

source: Bloomberg e EFG AM

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