Different sorts of central bank inaction

Daily update

The technology sector of the equity market might be experiencing a dilemma. If artificial intelligence is disruptive, will it disrupt technology companies? If it is not disruptive, are technology companies overvalued? The drop in technology share prices suggests that there has not been a bubble—the adjustment is relatively focused, and there has been little borrowing behind this. This mutes the economic consequences of recent moves.
There are two major central bank meetings today. It is easy to dismiss the ECB meeting as policy is seen as stable. The Bank of England offers some uncertainty. Weirdness in data collection timing distorted December inflation numbers, but the trend in inflation should be down. That will allow rate cuts this year, but not just yet.
German December factory orders data are due. These numbers have tended to surprise (notably) to the upside recently, and if the data is revised stronger the revisions tend to be large. US job openings data may be of interest, as US firms’ reluctance to hire was a feature of 2025 but one that may fade in 2026.
Geopolitical noise remains just noise. US President Trump’s social media account criticized Iran, but US-Iran talks are scheduled for tomorrow. Oil price moves have not been economically significant.