Written Commentary
Light calendar of data unlikely to stir markets’ animal spirits; digesting Australian CPI, RBNZ rate hold, Country Garden liquidation order petition; awaiting Eurozone & Italian confidence surveys, US revised Q4 GDP and Goods Trade balance; G20 Fin Min meeting, plenty of Fed speakers and corporate earnings, UK and Italy bond auctions
China: Country Garden liquidation petition heightens focus on next week’s key NPC meeting
US Q4 GDP seen unrevised, focus on tomorrow’s Personal Income and PCE report
EVENTS PREVIEW
What looks to be a busy run of data is likely to have a relatively limited impact on subdued markets. There are Australian CPI (better than expected) and Q4 Construction Output along with Turkey’s Trade Balance to digest, while ahead lie confidence surveys for the Eurozone and Italy, which are seen fractionally better, but still weak, as the first revision to US Q4 GDP accompanies the monthly Goods Trade Balance. As expected the RBNZ opted to keep rates unchanged at 5.50% overnight, while sounding less hawkish on the inflation outlook, while the central bank speaker roster for today is dominated by the Fed, with G20 Finance Ministers gathering in Brazil for a 2-day meeting. Notably BoJ’s Shimizu sounded a cautious note on the BoJ meeting its inflation target overnight, while sticking to the board’s narrative about 2024 wage trends being critical to the policy outlook. A relatively busy run of corporate earnings will likely feature the following amongst the headline makers: Baidu, Xinyi Solar, Casino Guichard Perrachon, Holcim, Reckitt Benckiser, Uniper, HP, Liberty Media and Royal Bank of Canada. Govt bond supply takes the form of UK 7-yr and Italian 5 & 10-yr and FRN 7-yr. The ‘winding up’ petition overnight for China property developer Country Garden is a timely reminder just how critical to the economic outlook next week’s China NPC (National People’s Congress) meeting will be, given that it will set out the authorities’ plans for the economy, above all the biggest challenge of restoring shattered confidence.
** U.S.A. – Q4 GDP revised **
The first revision to Q4 GDP is expected to show headline unchanged at a robust 3.3% SAAR, but Personal Consumption shaded 0.1 ppt lower to 2.7%, but this is now very historical, with tomorrow’s Personal Income and PCE data of rather more importance. Yesterday’s weaker than expected Consumer Confidence was perhaps more eye-catching for the revisions, which saw January revised down to 110.9 from an originally reported 114.8, making the drop to 106.7 rather less dramatic, and while the Labour Differential fell (Jobs Plentiful minus Jobs Hard to Get) eased back on the month, it remains at robust levels historically, and the overall willingness to buy too. Still the sharp revision is also a reminder that initial impressions can be deceptive, even if markets will generally always ride roughshod of such ‘subtleties’.
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