United States: Positive Economic Signals Amid Fed Efforts
This week’s data fuels optimism about the U.S. economy’s resilience against the Federal Reserve’s anti-inflation measures. Economic activity exceeded expectations, and inflation continued its deceleration, reflecting the Fed’s potential success in its inflation containment efforts.
Next week’s highlights: Construction Spending (Thu.), ISM Manufacturing (Thu.), Employment (Fri.)
International: Central Banks Take Center Stage
Foreign central banks had an active week, with the Bank of Japan signaling a possible rate hike in April. A dovish announcement from the Bank of Canada suggests earlier-than-expected rate cuts, and the European Central Bank is anticipated to cut rates in April, though June remains a possibility.
Next week’s highlights: China PMIs (Wed.), Bank of England Policy Rate (Thu.), Eurozone CPI (Thu.)
Interest Rate Watch: Steady State
The upcoming Federal Open Market Committee (FOMC) meeting on January 31 is expected to maintain the current fed funds rate and quantitative tightening pace, aligning with the widespread consensus.
Credit Market Insights: Borrowing Trends in the Beige Book
The latest Beige Book from the Federal Reserve indicates overall economic stability. However, a closer look reveals emerging challenges, especially in household borrowing, highlighting potential vulnerabilities.
Topic of the Week: Disruptions in the Red Sea
Recent Houthi militant attacks in the Red Sea are impacting global supply chains. Container ship spot rates have surged, and trade routes are being diverted. The U.S. appears better positioned to weather potential disruptions, given businesses’ improved resilience.
