Written Commentary
- US and UK again in focus statistically; digesting UK Retail Sales, Singapore Exports and Japan services output, awaiting US PPI Housing Starts and Michigan Sentiment; busy run of central bank speakers, and smattering of corporate earnings, as US heads into long President’s Day holiday weekend
- UK Retail Sales: much sharper than expected rebound broad based outside of clothing, but still leaves retail spending flat over turn of the year
- US PPI: marginal increase expected, but stronger than expected CPI and Import Prices suggest some modest upside risk
- US Housing Starts seen little changed, some potential for weather related disruption
- US Michigan Sentiment: slight increase seen on higher equities and lower mortgage rates, some debatable downside risk from Retail Sales
EVENTS PREVIEW
Once again, the US (PPI, Housing Starts, Michigan Sentiment) and UK (Retail Sales) top a relatively light statistical schedule, with the overnight Singapore Exports and Japan’s Tertiary Industry (services) Index to digest. A busy day for ECB and above all Fed speakers – is accompanied by an expected no change rate decision in Russia, and a smattering of corporate earnings, while Sunday will see China’s PBOC conduct its monthly 1-yr MTLF operation, which is expected to see the rate held at 2.50%. Next week is very light on major data and long on monthly surveys, with Thursday’s G7 & India ‘flash PMIs’ likely to be the main focal point. The US looks to Existing Home Sales, UK to PSNB and GfK Consumer Confidence, continental Europe awaits Germany’s Ifo survey, final Q4 GDP and Eurozone CPI, French Business Confidence and other surveys including the ECB report on negotiated Wages, along with Swedish CPI. Japan has Trade, Australia Q4 Wages, and Canada has CPI and Retail Sales. The corporate earnings season in the US will remain busy, with the focus on AI darling Nvidia and major retailers, such as Home Depot and Walmart. A busy run of central bank speakers accompanies policy meeting minutes from Fed, ECB and RBA, while rates are seen hold in Indonesia, South Korea and Turkey. In the commodity space, mining behemoths BHP, Rio Tinto and Vale report earnings, there is the Egypt Energy conference, and the IEA, IEF and OPEC hold their annual symposium. The US will be closed for President’s Day on Monday.
** U.K. – January Retail Sales **
Retail Sales were much stronger than expected at 3.4% m/m and 3.2% m/m ex-Auto Fuel, though with December’s outturns revised to -3.3% m/m and 3.5% m/m, this means that sales were basically flat over the turn of the year. While there was weakness in Clothing & Footwear (-1.4% m/m following December’s -2.8%), there was some strength in Household Goods (1.8% m/m vs. -0.5%) and Food (3.4% vs. -3.1%), and as had been heavily flagged a sharp 3.2% m/m rebound in Non-store Retailing. Over extrapolating about underlying trends from a month’s data at this time of the year is never a good idea, but as with the economy as a whole, retail spending is essentially flat lining.
** U.S.A. – January PPI, Housing Starts & Michigan Sentiment **
In contrast to CPI, PPI is expected to be subdued, even if the sharp than expected rises in both CPI and Import Prices imply some upside risks to the consensus estimate of 0.1% m/m on headline and core metrics. Housing Starts are seen barely changed at 1.458 Mln or down -0.2% m/m, though there may be some downside risk from January’s bad weather. Last but not least, provisional Michigan Sentiment is expected to eke out a further small gain to 80.0 from 79.0, with a further boost from higher equities and the run of positive economic news. However, yesterday’s larger than expected fall in Retail Sales across all measures suggests consumers have been pulling in their horns, and was particularly unusual for January, which has typically seen a solid or even outsized rise in recent years (including pre-Covid), though the cold weather may well have had a sharp impact.
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