Economies

The current housing starts index is weak. It is below its 3-month moving average and heading down. Its RSI is on the bearish side of 50.

ISM Manufacturing data was released yesterday, printing at 47.7. A value under 50 shows contraction, whilst values above 50 are expansionary. There is concern over one component of the data - ISM Manufacturing Prices. This ticked higher at 51.3. This is a big jump from the previous 44.5 and is much higher than the 45.5 expected.

Yesterday’s GDP data show that the US economy decelerated at a higher pace than previously reported. Q4 GDP was revised to 2.7%, which is down from the previously reported number of 2.9% and lower than Q3’s 3.2%. The revision is due to lower consumer spending and exports, with personal consumption expenditure up 1.4% compared with the prior forecast of 2.1%.

The FOMC minutes show that the Fed sees a slowing of inflation, which may support a peak in the federal funds rate this year. However, the minutes were penned before notable data. January’s jobs report was strong, showing an increase of 517,000 in nonfarm payrolls. Inflation was also higher than consensus, with the headline CPI printing at 0.5% m/m.

Sticky inflation persists. The prices of median goods and services have ticked up. This slow change of prices is a headache for the Federal Reserve. They will worry that inflation expectations have anchored to an elevated level.

The European Commission upgraded its 2023 growth forecast, but the pair is little changed, as markets brace for the latest CPI inflation data from the US on Tuesday

The 517K non-farm payroll surprised the market. This beat the most bullish forecasts. However, not all may be as it seems.

Powell’s interview saw market volatility, but prices popped with the Fed chair not sounding any more aggressive about raising interest rates.

The US economy added 517,000 jobs in January and unemployment dropped to new five-decades low, which strengthens the Fed’s view on the appropriate policy path and sent the pair lower on Friday

Job Openings and Labour Turnover came in yesterday ahead of expectations. It printed at 11.01m, ahead of the 10.28m forecast. JOLTS data is lagging and includes full-time and part-time vacancies. This makes its interpretation murky.

Fed: 25 bps (priced in). Will the Fed send a strong message? Fed funds futures still pricing a pivot.