The macro review for w/c 10 February 2020 – US data reflects the ongoing dichotomy between production and consumer metrics. Industrial production continued to decline slightly led by the weakness in aircraft and electricity and gas output. The USTR also announced this week that the US was increasing the import duty on civilian aircraft imports from the EU from 10% to 15% in Mar.
At the same time, measures of consumer sentiment and expectations lifted to the second highest levels since the GFC. Very few mentions were made by consumers regarding Coronavirus. Retail sales growth increased at a slightly faster pace in Jan with annual growth slowing but remaining elevated. While JOLTS data indicates more significant slowing in job openings, metrics such as new job hires remains elevated. Consumer price growth accelerated led by energy.
Outside of the US, growth remains weaker.
Weaker economic conditions persisted in Q4 for Europe. Industrial production declined notably in Dec across the Eurozone. GDP growth in Q4 was much slower – and particularly weak in the larger economies – zero growth in Germany and declines in Q4 GDP in Italy and France.
UK GDP slowed to zero in Q4 – with distortions in the data due to the Brexit process.
Aus business conditions and confidence in Jan continued to track well below trend averages – reflecting the ongoing malaise in the economy. While there was little obvious deterioration in regional data due to bushfires, trading conditions still weakened and employment growth slowed notably. Conditions are expected to remain weaker as forward orders and exports remain in contraction.
There are more data releases covered in the review document. Use the links on the contents page to navigate to different country sections. Download the review here;
The outlook for w/c 17 February 2020 – There are several important highlights this week.
On the data front, the prelim PMI’s for the US, Europe, Japan, UK and Aus will be released at the end of the week. This will be one of the broader, earlier indicators of any disruptions to output from the Coronavirus quarantine.
In the US, FOMC minutes, PPI for Jan and several regional manufacturing surveys for Feb will be released.
The US Treasury will be settling approx. $303bn in in ST bills, notes and bonds this week – raising approx. $77.5bn in new money. One of the heavier weeks of supply for a while. This will continue to be supported with overnight repo operations on each business day of up to $100bn as well as two 14-day term repo operations this week of up to $25bn each.
The ECB minutes will also be released this week.
Data out of Japan this week includes the prelim Q4 GDP result, industrial production and merchandise trade for Dec and CPI for Jan.
For Aus, the RBA minutes will be released. Important Q4 wage price index and Jan labour market data will be released.
More detail (including a calendar of key data releases) is provided in the briefing document – download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
