Written Commentary
Busier day for statistics: digesting Japan national CPI, UK BRC Shop Prices, French and German Consumer Confidence, Fed Schmid rate comments; awaiting Brazil IPCA-15 inflation, US Durable Goods, House Prices, Consumer Confidence and Dallas & Richmond Fed surveys; BoE and ECB speakers; auctions in UK, Germany, Netherlands and US; broad mix of corporate earnings
UK BRC Shop Prices: further sharp fall in food inflation the driver, allied with subdued goods inflation, but Services still key for BoE
German and French Consumer Confidence still very weak, fall in purchase climate measures points to weak private consumption
US Consumer Confidence: seen sustaining robust recovery, supported above all by perceptions of still strong labour demand
US Durable Goods Orders: very soft Boeing orders to weigh on headline, core measures seen eking out marginal gains
EVENTS PREVIEW
The overnight Japan national CPI and UK BRC Shop Price Index get this week’s run of key inflation data under way, and are accompanied by French and German Consumer Confidence, Brazil IPCA-15 Inflation and a rash of US data: Durable Goods, CS Corelogic & FHFA House Prices, Consumer Confidence and Richmond & Dallas Fed surveys. There are some Fed and BoE speakers, with KC Fed’s Schmid joining the chorus of Fed speakers stating that there is no rush to cut rates, while Hungary’s MNB is expected to cut rates a further 100 bps to 9.0%, and by contrast Nigeria’s CBN, meeting for the first time since last July’s upheaval, is seen hiking rates 250 bps to 21.25%, with risks skewed to the upside. A busy day for corporate earnings, will likely feature the following among the headline makers: abrdn, Munich Re, Agilent Technologies, American Tower, eBay, Lowe’s, Macy’s, as Bank of Montreal and Bank of Nova Scotia kick off this week’s run of Canadian Bank reports. A busier day for govt bond auctions sees the US auction 7-yr, UK I-L 15-yr, Germany 26-yr and Netherlands 20-yr. In the energy commodity space, London International Energy Week gets under way, while there are earnings reports from Constellation Energy, Devon Energy and Mexico’s Pemex, while Agricultural commodities look to USDA crop reports.
In terms of the overnight run of data, Japan’s CPI fell but came in above expectations, though this was primarily due to a technical statistical factor, namely a jump in holiday related prices, which were measured against prices four years ago, to try and iron out Covid effects, which the BoJ will be more than aware of, and per se will not impact their policy outlook deliberations. U.K. BRC Shop Prices dropped as expected to 2.5% y/y, paced above all by a further fall in Food Prices to 5.0% y/y from 6.1%, as Non-Food price inflation remained very subdued at 1.3%. French and German Consumer Confidence remained depressed, with France seeing an unexpected fall to -89 against expectations of a slight rise to 92, while the German GfK in effect stabilized as expected at a very weak -29.0; in both cases the purchase climate deteriorated.
** U.S.A. – Consumer Confidence, Durable Goods Orders, House Prices **
US Consumer Confidence is seen edging up to 115.0 after January’s unexpectedly strong rise to 114.8 from 108.0, with robust labour demand underpinning the current strength, as was so evident in January’s sharp Labour Differential rebound (see chart). Headline Durable Goods Orders are forecast to take a big hit (exp. -5.0% m/m) from very weak Boeing orders, but are seen up 0.2% m/m ex-Transport and 0.1% m/m on the core Non-defence Capital Goods ex-Aircraft metric. FHFA and CS CoreLogic House Prices (for December) are seen up 0.3% and 0.2% m/m to push the latter’s y/y rate up to 6.0%, remarkable given the rise in mortgage rates.
To view the full report and to sign up for daily market commentary please email admisi@admisi.com
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
