Daily update
Daily update
- Yesterday’s US consumer price data provoked some unease in bond markets. This is mainly the fault of Federal Reserve Chair Powell—not because Powell’s policies drove inflation higher, but because Powell’s “data dependency” mantra means markets overreact to any data point. Egg prices are not controllable (not even by presidential executive order), but the fact that food price inflation is creeping up may have implications for other policies that are hurting US farmers. Today’s producer price data may show companies anticipating tariffs.
- UK fourth quarter GDP was stronger than expected, with services leading growth. There were positive revisions to past history, and the UK has a history of revising its GDP data higher over time. It is a reminder that grouching from companies that do not like tax increases is not always a reflection of economic reality.
- The ECB publishes its monthly bulletin, to the polite disinterest of markets. Germany published final January consumer price data, to the complete disinterest of markets.
- Russian President Putin will hold talks with US President Trump over Ukraine. Markets are not likely to overreact—there is inevitable uncertainty about how long any deal would be honored. A ceasefire would not change energy flows or start reconstruction, and higher defense spending is inevitable.