Daily update
Daily update
- US personal income and consumption data is due, with strength expected in consumption (funded by savings and credit). Partly, this is due to the unremitting hedonism of the US consumer. Low unemployment will also help; while this has not translated into pay bargaining power, it gives a level of job security that reduces the need to save as an insurance against an uncertain future.
- Attention will focus on the core PCE deflator as a measure of inflation. The forecast consensus is for an increase of 0.4% or 0.5%. Airfares will be part of this (the desire to go on holiday at any price is a factor). Seasonal adjustment may also boost the number—but what goes up in seasonal adjustment now, must come down later on.
- Japanese consumer price inflation rose 1.9% y/y on the internationally defined core measure. Hotel accommodation was part of this move (the travel bug is a global phenomenon). Incoming Bank of Japan Governor Ueda suggested a “creative” approach to policy, hinting at some changes in spin without altering the accommodative substance.
- German 4Q GDP was revised lower—as with the US revisions yesterday, this is a reminder that real-time data has become less reliable. Consumer spending was behind some of the weakness.
