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February 20, 2024

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ECB – What is it Actually Targeting as it Assesses Price Persistence?
Paying Article

February 20, 2024 10:24 AM UTC

The ECB remit is targeting an inflation rate of 2% over the medium term.  Implicit in this is that this is measured on a moving y/y basis.  However, there is nothing sacrosanct in this as the ECB is starting to be more open about using shorter-term measures, albeit more as indicators of price mome

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China: 5yr LPR Cut But Not 1yr LPR
Paying Article

February 20, 2024 9:17 AM UTC

A larger than expected 25bps cut in the 5yr Loan Prime Rate (LPR) has been delivered, but the 1yr LPR rate was unchanged given that PBOC reluctance to cut the 1yr Medium-Term Facility rate (MTF) this month.  The 5yr LPR rate is not a game changer for residential property, as bigger policy moves are

February 16, 2024

U.S. Fed's Daly - Patience needed, three cuts reasonable for 2024
Paying Article

February 16, 2024 6:11 PM UTC

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As Expected, CBR Keeps the Key Rate at 16%
Paying Article

February 16, 2024 1:49 PM UTC

Bottom Line: As we predicted, Central Bank of Russia (CBR) announced on February 16 that it decided to keep the policy rate unchanged at 16% after lifting the rate in the last five consecutive MPC meetings, despite inflationary pressures and expectations remaining elevated, domestic demand still out

February 15, 2024

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Preview: Due February 29 - U.S. January Personal Income and Spending - Core PCE prices seen stronger, but less so than CPI
Paying Article

February 15, 2024 7:12 PM UTC

We expect January to deliver a 0.3% increase in the core PCE price index, above recent trend but slower than the 0.4% increase seen in January’s core CPI. We expect subdued gains of 0.2% in personal income and 0.1% in personal spending, with weather probably behind the weakness.

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U.S. January Retail Sales See a Significant Dip to Start the New Year
Paying Article

February 15, 2024 2:07 PM UTC

US retail sales have made a weaker than expected start to Q1, falling by 0.8% overall, 0.6% ex autos and 0.5% ex autos and gasoline. One weak month after a strong Q4 (though Q4 did see downward revisions with this report) does not make a trend however, and January’s weakness may be in part weather

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Argentina: CPI grows 20.6% in January
Paying Article

February 15, 2024 1:26 PM UTC

Argentina's CPI surged in January, marking a 20.6% increase (m/m), the highest globally. Annual figures show a staggering 254% rise. The rise was influenced by the exchange rate devaluation and the release of controlled prices. Only in April we will probably see a CPI cleaned from this noises. The g

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UK GDP Review: Recession Confirmed
Paying Article

February 15, 2024 7:56 AM UTC

Coming in lower than expected after taking account of downward revisions, and probably hit by industrial action, GDP shrank by 0.1% m/m in December data, a result that reflected the plunge in retail sales and abnormal weather that meant a Q4 drop in GDP and consumer sending (Figure 1).  Admittedly

February 14, 2024

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Brazil: Real Wage Growth to Boost Consumption
Paying Article

February 14, 2024 10:20 PM UTC

Brazil's labor market showed remarkable resilience in 2023, with a notable decrease in unemployment to 7.4% from 8.6%. Increased occupation drove consumption and growth, though real wage growth outpaced job creation. Despite challenges, strong syndicates and minimum wage policies will sustain upward

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Russia’s Inflation Remains High at 7.4% in January
Paying Article

February 14, 2024 7:22 PM UTC

Bottom Line: After increasing seven months in a row till December 2023, inflation remained unchanged at 7.4% YoY in January after December. We think stubborn price pressures continue to be strong due to high military spending, currency weakening, tight labour market, high salaries and benefits, and

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FOMC Minutes to Show Caution Even Ahead of Subsequent Strong Data
Paying Article

February 14, 2024 6:31 PM UTC

FOMC minutes from January 31 are due on February 21. The meeting saw the Fed moving away from a tightening bias but the minutes are likely to show no rush towards easing. The minutes are likely to note progress on inflation and resilience in activity. If the latter is seen as a risk to continued pro

U.S. Fed's Goolsbee - Still hopeful inflation on track for target
Paying Article

February 14, 2024 3:08 PM UTC

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Preview: Due February 15 - U.S. January Retail Sales - A below trend month restrained by weather
Paying Article

February 14, 2024 1:16 PM UTC

We expect a 0.3% decline in January retail sales, with a 0.1% decline ex autos and an unchanged outcome ex autos and gasoline. The data should be seen alongside a strong December with weather probably providing some restraint in January. 

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Markets: ECB/BOE/SNB Before the Fed?
Paying Article

February 14, 2024 11:35 AM UTC

Bottom Line:  We do see 25bps cuts arriving from the ECB/BOE and SNB and most likely these will all be in June.  Whether this is before the Fed will likely be a function of the Fed, as we see these interest rate moves as being driven by domestic fundamentals rather than the Fed being an influence.

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UK CPI Inflation Review: Headline and Core Steady But Softer Underlying Pressures Evident
Paying Article

February 14, 2024 8:01 AM UTC

Superimposed over both upside and downside surprises, UK headline and core inflation have been on a clear downward trajectory in the last few months the former having peaked above 10% in February and the latter at 7.1% In May. However, this trend surprisingly stalled in December as the headline rate

February 13, 2024

U.S. January Median CPI at 11-Month High
Paying Article

February 13, 2024 5:23 PM UTC

The Cleveland Fed’s Median CPI for January confirms the relatively broad based nature of the upside CPI surprise, rising by 6.5% annualized, its strongest increase since February 2023.

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U.S. January CPI Shows Strength in Services to Start the New Year
Paying Article

February 13, 2024 2:04 PM UTC

January CPI has come in higher than expected, rising by 0.3% overall and 0.4% ex food and energy, suggesting inflationary pressures still persist at the start of 2024, though whether the recent tendency of core PCE prices to underperform core CPI will persist is unclear. Core CPI rose by 0.392% befo

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Brazil: Bolsonaro Closer to Facing Jail Time
Paying Article

February 13, 2024 1:02 PM UTC

The Brazilian Supreme Court's action against Bolsonaro's inner circle, accusing them of undermining the rule of law and plotting against electronic voting, signals a potential turning point. Bolsonaro's popularity, despite legal challenges, underscores Brazil's divided political landscape. The upcom

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Switzerland: Disinflation - Fanned by the Franc
Paying Article

February 13, 2024 11:14 AM UTC

It is somewhat ironic that the sharp and surprising slump in CPI inflation in January resulted in a weakening of the Franc, the currency’s recent and still clear strength actually the major factor behind this seemingly clearer disinflation.  Indeed, the CPI details showed the major factor was eve

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BJP's Political Confidence Shines Through in India's FY25 Interim Budget
Freemium Article

February 13, 2024 10:44 AM UTC

India's interim budget for FY25 presented ahead of the upcoming general election, reflects the government's commitment to economic growth, infrastructure development, and fiscal responsibility. Finance Minister Nirmala Sitharaman highlighted key aspects of the budget, emphasizing a multi-pronged app

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China: 5% or 4.5-5.0% Growth Target
Paying Article

February 13, 2024 10:34 AM UTC

Though economics would argue for a 4.5-5.0% growth target for 2024, politics will likely mean that a 5% growth target is chosen in March.  With the residential property overhang, weak net exports with a shift of global supply chains and sluggish private sector business investment growth, this will

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Ukraine War Update: The Struggle for Western Support
Paying Article

February 13, 2024 9:39 AM UTC

Bottom Line: As we expected, the deadlock in Ukraine continues to hold as of the winter months, and protracted conflict remains active as both sides continue to failure to gain ground. The support to Ukraine from the Western Block remains fragmented despite European Union (EU) leaders unanimously ag

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UK Labor Market: Further Signs of Clearly Softer Wage Pressure
Paying Article

February 13, 2024 8:57 AM UTC

As we have underscored repeatedly, the BoE has come to regard the official average earnings data with some suspicion; after all, they have implied wage growth being well above other official and survey sources.  But even though they were higher than consensus thinking, the latest data are showing s

February 12, 2024

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Preliminary Signals Look Solid For Q1 U.S. GDP
Paying Article

February 12, 2024 6:11 PM UTC

Signals on Q1 U.S. GDP are still limited with little data for January yet available. However current momentum suggests a weak quarter is unlikely. Our current estimate is for an annualized increase of 2.4%. The Atlanta Fed’s nowcast is stronger, at 3.4%, which would be similar to Q4’s 3.3%.

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Preview: Due February 13 - U.S. January CPI - Subdued Start to the New Year
Paying Article

February 12, 2024 12:55 PM UTC

We expect January CPI to increase by 0.1% overall and 0.2% ex food and energy, with our forecasts before rounding being 0.13% overall and 0.23% ex food and energy. Still, the ex food and energy rate would then be slower than the 0.3% gains seen in November and December.

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Reserve Bank of India Review: No Rate Cut On The Horizon
Freemium Article

February 12, 2024 6:25 AM UTC

The Reserve Bank of India's Monetary Policy Committee, led by Governor Shaktikanta Das, chose to keep the repo rate unchanged at 6.5% for the sixth consecutive time, aiming to support ongoing economic recovery while ensuring a sustained decline in inflation. Despite signs of inflation moderation and

February 09, 2024

U.S. Fed's Logan - Notes progress on inflation but no urgency to ease
Paying Article

February 9, 2024 8:08 PM UTC

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U.S. Annual CPI Revisions Leave Picture Looking Little Changed
Paying Article

February 9, 2024 2:15 PM UTC

The much discussed annual US CPI revisions turned out to produce few major changes, a contrast to last year when late year data was revised up and early year data was revised down. The lack of significant revisions this year leaves the progress on inflation seen in the second half of 2023 intact.

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Banxico Review: Policy Rate Kept Stable but Doors Open for a Cut in March
Paying Article

February 9, 2024 2:05 PM UTC

Banxico maintained the policy rate at 11.25%, hinting at a potential cut in March. External rates had minimal impact on Mexico's economy due to the strong peso and interest rate spread. Despite past growth, recent data suggests a deceleration. Banxico remains optimistic amidst inflation, potentially

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Russian Economy Expanded by a Fast 3.6% in 2023, Rosstat Reports
Paying Article

February 9, 2024 8:47 AM UTC

Bottom Line: According to Russian Statistics Service’s (Rosstat) announcement, the Russian economy grew by a strong 3.6% in 2023 from a revised 1.2% drop in 2022, thanks to fiscal stimulus, increased defense spending to boost industrial production, continued consumer demand and lending coupled wit

February 08, 2024

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Mexico CPI Review: Unpleasant but It might be Transitory
Freemium Article

February 8, 2024 6:33 PM UTC

The CPI release for January by INEGI aligns with expectations, showing a 0.9% rise (m/m). This brings the Y/Y CPI to 4.9%, marking a third consecutive month of increase. Concerns may arise, but much of the rise stems from non-core items, possibly indicating transitory inflation. Banxico's strategy f

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Brazil CPI Review: Food Prices Lead the Rise in January
Paying Article

February 8, 2024 4:19 PM UTC

The Brazilian National Institute of Statistics reported January's CPI, rising 0.42% (m/m), slightly above expectations, with a Y/Y index drop to 4.5%. Food and Beverages saw the biggest increase at 1.4% (m/m). Despite CPI exceeding expectations, underlying measures show marginal improvements, sugges

February 07, 2024

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Bank of Canada Minutes Detail Inflationary Concerns
Paying Article

February 7, 2024 7:39 PM UTC

The Bank of Canada’s minutes from January 24 show significant concern about the persistence of inflation, despite seeing the economy as having moved into excess supply due to slowing demand. This leaves the BoC unsure about when to cut rates, though further increases now look unlikely.

U.S. Fed's Barkin - Notes strong data, calls for patience on rates
Paying Article

February 7, 2024 6:10 PM UTC

U.S. Fed's Collins - Strong employment report justifies caution on rates
Paying Article

February 7, 2024 4:48 PM UTC

U.S. Fed's Kugler - Rate cuts may be appropriate at some point
Paying Article

February 7, 2024 4:22 PM UTC

In her first speech as Fed Governor, Kugler, like most Fed officials, seems in no hurry to ease.

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UK Housing – Cracks Still Evident, as Transactions Sink
Paying Article

February 7, 2024 2:17 PM UTC

As mortgage rates have started to fall and recent house price data show somewhat unexpected resilience if not gains, there is increasing speculation that the worst is over the for UK housing market.  Regardless, with over half of mortgage holders yet to feel the hits from BoE hikes we feel this vie

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Argentina: Milei’s First set of Laws Rejected in the Chamber of Deputies
Paying Article

February 7, 2024 12:53 PM UTC

JJavier Milei's ambitious deregulation laws for the Argentine economy faced rejection in the Chamber of Deputies, signaling challenges in negotiating with the current Congress. Milei's government must now revise its strategy, possibly focusing on less contentious issues. Despite setbacks, the govern

February 06, 2024

Canada: BoC's Macklem - Shelter biggest contributor to above target inflation
Paying Article

February 6, 2024 6:12 PM UTC

U.S. Fed's Mester - Expects lower rates later this year
Paying Article

February 6, 2024 5:15 PM UTC

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BCB Minutes: Caution within the Easing Cycle
Paying Article

February 6, 2024 1:22 PM UTC

The BCB released minutes detailing the 50bps cut to SELIC, shedding light on monitored risks. Despite a unanimous vote, differences in language emerged, especially regarding variables. Notably, new government-appointed members were present. Internationally, the board noted minimal impact from Fed de

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Eurozone: The Last Mile, Price Persistence and the Supplies Surprise
Paying Article

February 6, 2024 11:34 AM UTC

That the EZ economy is bordering on recession has obviously been a factor in the ever clearer and broad disinflation process seen of late.  But we would argue (and many DM central banks would empathize) that it has been easing supply problems that has been the main factor.  This better supply back

RBA Review: Holding as per forecast
Paying Article

February 6, 2024 5:59 AM UTC

The RBA meeting on Feb 6th kept rates on hold at 4.35% as per our forecast. The RBA also left doors open for further tightening and continue to suggest data dependency to lead the future path. 

February 05, 2024

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Fed SLOOS on Bank Lending does not strengthen case for easing
Paying Article

February 5, 2024 7:33 PM UTC

The Fed’s latest quarterly Senior Loan Officer Opinion Survey on bank lending practices is unlikely to generate any urgency for easing, with the proportion of banks tightening lending standards declining, while measures of demand were also less negative, if less changed from October than data on l

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UK CPI Inflation Preview (Feb 14): Headline and Core to Fail to Fall Again?
Paying Article

February 5, 2024 2:13 PM UTC

With both upside and downside surprises, UK headline and core inflation have been on a clear downward trajectory in the last few months the former having peaked above 10% in February and the latter at 7.1% In May. However, this trend surprisingly stalled in December as the headline rate rose a notch

U.S. Fed's Kashkari - Potentially higher neutral rate gives Fed scope to pause
Paying Article

February 5, 2024 1:38 PM UTC

U.S. Fed's Powell - FOMC expectations probably similar to December dots
Paying Article

February 5, 2024 1:03 PM UTC