Written Commentary
- Busy run of UK and US statistics, as weaker than expected Japan Q4 GDP and Australian labour digested; plenty of central bank speakers, corporate earnings, IEA Oil Market Report, IGC Grains Report
- UK: weaker than expected Q4 GDP weighed down by Services, Consumption And Construction, despite manufacturing boost; does little to change BoE rates calculus
- US Retail Sales: forecasters again suggesting loss of momentum despite repeated upside surprises; autos to weigh on headline, core measures seen posting modest gains
- US Industrial Production: cold January weather to boost utilities, manufacturing seen flat, oil and mining E&P the wild card
- US manufacturing and housing surveys seen improving but remaining weak
EVENTS PREVIEW
A very busy day for major statistics is headlined by the UK with Q4 and monthly GDP and activity indicators, while the US has Retail Sales, Industrial Production, Import Prices, Weekly Jobless Claims, and NY & Philly Fed Manufacturing and NAHB Housing Market surveys. There are also the weaker than expected Japan Q3 GDP and Australian Unemployment to digest, and various final Eurozone national CPI readings ahead. As expected Philippines BSP left rates unchanged, while a busy schedule of central bank speakers features regular testimony from ECB’s Lagarde, along with other ECB, BoE, Fed, Riksbank and Norges Bank speakers. The run of corporate earnings is likely to feature the following among the headline makers: Airbus, Orange, Pernod Ricard, Renault and Stellantis in Europe, while the US looks to Applied Materials, CBRE, Deere & Co, Southern Company and US Foods. Govt bond supply sees auctions in France, Spain and Canada. In the commodity space, the IEA rounds off this month’s run of Oil Market Report, and the IGC issues its monthly Grains Report.
** U.K. – Q4 / Dec GDP, Industrial Production, Construction Output **
Revisions played quite a large part in the lower than expected -0.3% q/q for Q4 GDP, despite a better than expected Dec monthly GDP of -0.1% m/m, with Nov GDP revised down to 0.2% m/m from 0.3%, on the back of Nov Services output being cut to 0.2% m/m from 0.4%, allied with persistent Construction Output weakness (Dec -0.5% after Nov -0.7%), and despite some strength in Manufacturing Output (Dec and Nov +0.8% m/m). In quarterly terms, Private Consumption continued to contract -0.1% q/q, with Q3 revised down to -0.9% q/q from -0.5%, while Net Exports more than reversed Q3’s positive contribution to GDP. The one bright spot was Business Investment rebounding 1.5% q/q, after a smaller than originally reported drop of -2.8% in Q3, though this initial estimate is often heavily revised. While the overall worse than expected outturn will likely prompt markets to bring rate expectations a little further forward, these reports really do nothing to change the bigger picture on growth, i.e. an economy without any growth momentum, even if the recession is shallow. It remains to be seen if high frequency indicators suggesting a pick-up in Q1 prove to have any sustained momentum.
** U.S.A. – Retail Sales, Industrial Production, NY & Philly Fed & NAHB surveys **
Retail Sales have all too frequently surprised on the upside over the past year, but maybe this time will be different, with the consensus looking for the weak auto sales to drag headline down -0.1% m/m, despite some offset from higher gasoline prices, with ex-Autos & Gas seen up 0.3%, and the core ‘Control group’ measure up just 0.2%. Industrial Production should get a boost from utilities output due to the cold January weather, and is seen up 0.3% m/m, but Manufacturing Output is expected to be unchanged, in line with sector surveys, though energy exploration & extraction could be a wild card. The farcically volatile NY Fed Manufacturing is forecast to rebound sharply from January’s -43.7 to a more ‘normally’ weak -11.8, with the more reliable Philly Fed equivalent seen edging up to -8.6 from -10.6; lower mortgage rates are expected to give the NAHB Housing Market Index a further modest boost to 46 from 44.
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.
