Macro News Recap: Slow Start to the Week with Focus on Central Bank Remarks

Here’s a rundown of what’s happening in the markets today:

Today marks a quiet start on the economic front, with attention shifting to speeches from Fed and ECB officials.

In Denmark, January’s CPI inflation figures are set for release, with expectations of a rise to 1.0% from December’s 0.7%. However, it’s worth noting that January’s inflation data tends to be uncertain due to businesses adjusting prices at the start of the year, along with significant impacts from clothing sales.

In the US, all eyes are on tomorrow’s CPI inflation report for January. This data will be crucial in assessing whether recent positive surprises in US economic data translate into higher inflation pressures. As such, market expectations for rate cuts in 2024 have been tempered, given the string of upbeat data releases.

Turning to recent events, Israeli special forces conducted an operation in Rafah, freeing two Israeli hostages but resulting in numerous casualties. Additionally, in the US, annual revisions to CPI seasonal adjustments showed mixed results, with December’s CPI slightly lower while November and October data saw minor upward revisions.

On the political front, Donald Trump’s remarks about NATO and Russia have sparked criticism, with NATO’s secretary-general emphasizing the alliance’s readiness to defend all allies. Meanwhile, in Europe, ECB Governor Panetta’s comments about the euro area’s inflation falling faster than expected suggest a looming shift in monetary policy.

Over the weekend, Finland elected former prime minister Alex Stubb as its new president, while Norway saw core inflation in line with expectations. Chinese credit growth also hit a record high, indicating ongoing stimulus measures.

Equities experienced a rally on Friday, led by US and cyclical stocks, while European bond yields edged higher, reflecting reduced expectations for central bank easing. In the FX market, currencies like NZD, NOK, SEK, and AUD performed well despite global yield increases, signaling optimism about growth prospects.

Overall, while the week begins quietly, market participants remain attentive to central bank remarks and upcoming data releases for further direction in the markets.

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