Daily update
Daily update
- Yesterday’s US GDP revisions did not add much to investors’ stock of knowledge. The US consumer proved stronger than initially thought, as US consumers so often are. The market-based personal consumer expenditure deflator has slowed quite notably over recent quarters. What good old fashioned supply and demand is doing is creating a quite powerful disinflation story.
- We get US consumer spending and the monthly expenditure deflator for January today. Weak retail sales have depressed expectations for overall spending, but of course there is more to consumer spending than what happens inside the shopping mall. Having fun may support spending. The deflator is expected to show more price increases—this is quite common in January as companies test what price changes they can get away with.
- French, Spanish, and German February consumer price inflation data are all expected to show distinct disinflation tendencies. This means that ECB policy continues to tighten—if consensus expectations for today’s German data are correct, real German interest rates have risen 1.6% since the last policy change.
- Japanese January retail sales were somewhat stronger. However, halts in the auto sector led to weak industrial production. These stoppages will reverse, and the Bank of Japan prioritizes wage growth over production in making policy.