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Macroeconomics: The Day Ahead for 24 January

  • PMIs and other surveys dominate much busier schedule, also digesting UK PSNB, awaiting Brazil IPCA inflation and Mexico CPI; ECB and SNB speakers; rash of US corporate earnings; German & US 2-yr, Dutch 31-yr
  • PMIs expected to remain weak, but improving modestly in Eurozone, while languishing in UK and US, underline slowing DM economic momentum going into Q1
  • Germany/Eurozone Consumer Confidence: picking up again, but still below prior historic lows


A much busier day, even if much of East Asia continues to celebrate the Lunar New Year, with the economic calendar dominated by surveys, via way of G7 flash PMIs topping the bill, and accompanied by German Consumer Confidence, French Business Confidence, UK CBI Industrial Trends and PSNB Budget data (worse than expected to inflation-linked debt payments and the energy support measures, though Nov PSNB revised down), with Brazil IPCA inflation and Mexico CPI also due. There are more ECB speakers and SNB’s Schlegel, while Nigeria’s CBN is seen hiking rates a further 100 bps to 17.0%, and Hungary’s MNB holding at 13.0%. The busy week for US corporate earnings cranks into top gear with results from 3M, GE, Halliburton, DR Horton, Lockheed Martin, Microsoft, Raytheon, Texas Instruments, Travelers, Union Pacific & Verizon amongst others, thus covering a broad range of business sectors. Given a good deal of fog and a lot of forecasting ‘hot air’ in macroeconomic terms, the microeconomic picture will likely offer rather better and more tangible insights about the state of the US and other economies. Govt bond supply comes via way of Dutch 31-yr, and 2-yr sales in Germany and USA.

** G7 – January flash PMIs / national surveys **
To a degree today’s PMIs are more relevant than the Q4 GDP prints at the end of the week, in so far as they offer an indication of momentum over year end, which above all in the US appears to have slowed sharply, while the Euro area and UK are running at stall speed, but not contracting as sharply as some had expected. Forecasts assume a marginal improvement in the Eurozone at levels just below 50.0, and little or no change in the UK with Manufacturing weak and Services similar to the Eurozone, while US readings are firmly in contraction. The UK CBI Industrial Trends is expected to echo the Manufacturing PMI with Orders slipping to -8 from -6, but more pertinent will be whether is any improvement in the quarterly Business Optimism, after it collapsed to -48 from -21 at the peak of the Truss debacle in October. Financial markets are enamoured of ‘second derivative’ perspectives, but sight should not be lost of the fact that the overall picture is one of G7 economies treading water at best. As both today’s German GfK Consumer Confidence and yesterday’s Eurozone provisional Consumer Confidence (see chart) amply demonstrate, both indices have recovered in the past few months, but remain below prior historic lows.

Eurozone Consumer Confidence chart

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