Global economic data on net are coming in within consensus forecasts and near the breakeven line for the Relative Performance Index (RPI), at minus 9 overall and minus 10 when excluding prices (RPI-P) to indicate only a marginal bias of underperformance.
In the Eurozone, steeper-than-expected falls in December retail sales and producer prices reduced the RPI to minus 13 and the RPI-P to minus 8. Overall activity is not lagging forecasts by much but the economy is still struggling to find any real momentum.
In the UK, a surprisingly resilient housing market at the start of the year helped to lift the RPI (4) back above zero, albeit only just. Even so, with the RPI-P at minus 15, it is only the inflation data that have recently beaten expectations ─ although that in itself should help keep the Bank of England on hold again next month. The real economy is lagging modestly. This week’s new CPI and jobless data will be watched closely.
In Switzerland, there were again no major surprises in last week’s data, reflected in readings of 3 and minus 5 on the RPI and RPI-P respectively. A cut in the Swiss National Bank’s policy rate in March rate remains a real possibility.
In Japan, further evidence of unexpectedly weak consumer spending left the RPI at minus 21 and the RPI-P at minus 10. Speculation abounds over Bank of Japan tightening but recent data have reduced pressure for an early hike in key interest rates and may also trim the level at which the target rate is seen peaking.
In China, surprisingly weak consumer prices ensured that the RPI (minus 21) and RPI-P (minus 30) remained sub-zero. An underperforming real economy and mounting deflation worries may yet force another cut in loan prime rates.
Better-than-expected jobs data give a slight lift to Canada’s RPI, which overall and also when excluding inflation moved from the negative mid-single-digits to the positive mid-single-digits to indicate that recent data on net are coming in within consensus ranges. This suggests that economic data, after a run of disappointingly soft readings in January, are now meeting the Bank of Canada’s forecasts to further suggest that a rate cut is probably not very far away.
US data continue to come in on the high end of Econoday’s consensus ranges, reflected in both the RPI and RPI-P which ended the week in the positive high single digits. In this case, readings within consensus forecasts imply no near-term change for Federal Reserve policy.