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Economic and Financial Analysis
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Italian GDP Fell Slightly At The End Of 2022
Unsurprisingly, domestic demand was the driver of this minor contraction. A short technical recession might ensue now, but a gradual recovery is expected to follow in the second quarter.
FX Daily: Bracing For Volatility
There are some important data to watch today: the Employment Cost Index in the US, GDP in the Eurozone, and CPI in France.
ECB Cheat Sheet: Wake Up, This Isn’t The Fed
A 50bp hike by the European Central Bank, and a repeat of its December guidance, are set in stone but a pushback against subsequent cut expectations will move 5Y euro rates higher.
Eurozone Sentiment Continues To Improve
Economic sentiment in the eurozone increased to 99.9 in January, the third consecutive increase. Service sector businesses were particularly upbeat, resulting in stubbornly high selling price expectations.
Drastic Shift In Natural Gas Outlook
European gas prices have collapsed over the Northern Hemisphere winter. Mild weather and weak industrial demand have ensured that gas storage has remained strong.
FX Daily: Stress Testing The Consensus View
Fresh communication from central bankers will stress test investors' view that the peak in tightening cycles is close at hand. A Fed push-back against 2H23 easing expectations could support the dollar.
Asia Week Ahead: PMI Data From China And India
Next week we'll get PMI data from China and India plus several data reports from Korea.
Key Events In EMEA For The Week Of Jan. 30
The first Czech National Bank meeting of the year will take place on Thursday. The Board believes inflation expectations will remain anchored and that overall inflation will return to levels around 2% in two years.
Key Events In Developed Markets Next Week - Friday, Jan. 27
Next week is packed with central bank meetings.
U.S. Debt Ceiling Torture Heightens Recession Risk
Debt ceiling deals always happen, eventually. But this time it will be especially challenging given a split Congress and politicians willing to go to any extreme to score political points.
US Consumers Lose Momentum As Inflation Undershoots Fed’s Predictions
Consumer spending slowed sharply through the fourth quarter and we will need to see a rapid turnaround to prevent a contraction in the first quarter of this year.
FX Daily: US Pessimism Softens Ahead Of A Busy Week
Markets' concerns about the US growth picture seemed to have eased, paving the way for a modest recovery in the dollar.
Italian Businesses Upbeat In January, While Consumer Confidence Wanes
Italian confidence data point to a decent start to 2023, with services a growth driver and manufacturing stabilizing. Consumers, however, are more worried, still pressed by stubbornly high inflation.
FX Daily: Bank Of Canada Softens Up The Dollar
Notable yesterday was the dollar selling off after the Bank of Canada said it was ready to pause/end its tightening cycle.
Australia: Inflation Rise Means More Rate Hikes For The Reserve Bank Of Australia
Much of the recent inflation disappointment can be put down to one-offs, weather-related, and other seasonal effects.
Rising Wages In Hungary Risk Keeping Inflation Persistently High
Hungary recorded lower-than-expected gross average wage growth in November, but the acceleration in the rise of regular wages hints at a price-wage spiral.
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