Daily update
Daily update
- US President Trump suggested that Iran had 10 or 15 days to do a deal, or face (unspecified) negative consequences. The US military presence in the Gulf means investors have given more weight to these remarks. Oil prices have moved higher—not dramatically, but enough that it might be visible to the US consumer in a few weeks. That has a bearing on inflation perception and the US affordability crisis.
- Affordability is not the cost of living, and not necessarily about economic reality. Today’s December US personal income and spending figures should show ongoing consumption. After tariff induced volatility early in 2025, consumer spending growth stabilized as savings rates were reduced to pay for tariffs.
- The US PCE deflator is expected to stay just below 3% on both headline and core readings. The Fed minutes signaled a divergence around inflation (and thus policy), but this is about future inflation. Current increases in inflation are factored into Fed thinking.
- The UK published strong economic data. The January fiscal surplus was a record high, above the OBR and market consensus forecasts. This hints at an economy growing notably faster than reported. January retail sales were also much stronger than expected—consumers seemingly having delayed larger purchases to receive price discounts.