Brexit Bill goes before Lords
It was generally quiet last week on the data front, though we did see US inflation continue to tick higher with the January reading up 2.5% year-on-year. With retail sales also beating expectation, the pressure on a further increase in US rates is increasing. The Fed speakers last week were relatively hawkish, with Janet Yellen suggesting that the FOMC cannot be complacent, suggesting there may still need to be three rate hikes this year with a potential hike in March.
Sterling continues to be confined to the recent ranges, with UK inflation below expectations at 1.8% for January and the monthly rate falling by 0.5%. UK retail sales ended the week badly for Sterling with a fall of 0.3% month-on-month. This leaves Sterling looking vulnerable ahead of the Brexit Bill being debated by the House of Lords today.
European growth was weaker than expected with the GDP at 1.7%. The powerhouse of Germany seems to be running out of gas, with the ZEW economic sentiment index falling to the lowest level since October. Political concerns continue to rise in Europe with Greece seeking the next tranche of their bailout loan at the Euro-area finance ministers meeting in Brussels. The impending Dutch elections, resignation by Italy’s ruling Democratic Party leader Renzi, and wrangling in the French elections will continue to worry the markets.
We start this week with Presidents day in the US. With the Brexit Bill being debated by Lords, and the next round of bailout funds for Greece being discussed, the week could start with some volatility. There is talk of amendments being proposed by the House of Lords, which could add further uncertainty and delays to Mrs May’s plans to invoke Article 50.
- European Consumer Confidence
Mark Carney testifies before the Treasury committee, after the Bank of England upgraded its economic forecast, while leaving its inflation forecast and interest rates unchanged.
- RBA minutes
- German Manufacturing PMI
- Eurozone Services & Composite PMI
- US Services & Manufacturing PMI
The market’s focus will be on the minutes of the Federal Reserve’s most recent meeting. Given Yellen’s recent comments that it would be ‘unwise’ to wait too long, it will be interesting to see whether there is further fuel for a March rate hike, which would no doubt strengthen the Dollar further.
- UK Q4 GDP (2nd est)
- Eurozone inflation rate
- German IFO business climate
- US FOMC minutes
There is generally a European theme to the day, with the key data providing a further reading of the health of the key German economy. There will be further interest provided by ECB member Peter Praet, presenting a number of speeches in London about Brexit and financial services.
- German Consumer Confidence
- German GDP
The week finishes on a quieter note, with the only real data of note being US New Home Sales and Consumer Confidence.
- US New Home Sales
- US Michigan Consumer Confidence