Daily update
Daily update
- US January consumer price inflation data had several moderating influences. Used car prices (the curse of every economist) fell sharply. The fictitious owners’ equivalent rent (the largest component in the calculation) helped pull the headline numbers lower. However, grocery prices are still rising, as are electricity prices. They may shape perceptions of affordability.
- Japan’s headline fourth-quarter 2025 GDP growth was disappointing. However, the consumer showed a clear willingness to spend, with the third-quarter consumer data also revised higher. Business spending and inventories were a drag (how much businesses should invest if a country’s existing capital stock is being used more efficiently?). The weaker headlines are offset by more promising signals for coming quarters.
- Europe offers industrial production data, which is definitely not a market moving event. It does serve to remind investors that the European industrial sector is growing, and that European manufacturers are generally making things that the rest of the world wishes to buy.
- Market volatility (which is largely independent of economic factors) continues—there has been some profit-taking in gold. The wealth effects of these ups and downs are not likely to change much economically—the moves have been too quick to cause concern, or affect too small a group to change overall consumer behavior.