Follow Paul Donovan

Deflation (not)

| Tags: Paul Donovan

  • Spanish inflation is likely to be a focus, with investors nervous about deflation in the Euro area. The consensus is for a positive but very low inflation print - but this reflects the competitive improvements of the Spanish economy, and should not trouble the ECB unduly.
  • The UK offers revised GDP data for the fourth quarter (and such is the calibre of the UK ONS, there is a decent chance of significant revisions). The comprehensive house price index from the land registry should show house price growth broadly in line with nominal GDP.
  • Chinese premier Li said that significant downward pressures on the Chinese economy would be prevented, which some in the markets have overreacted to and assumed implies a massive stimulus is just around the corner. The evidence of economic weakness is not sufficient for that in our view.
  • US Fed speak continues, with Evans sounding exceptionally dovish in remarks overnight (forecasting rates barely above 1% in 2016). George is scheduled to speak today, and is likely to take quite a different approach to monetary policy tightening.

Listen to the audio version of this briefing.