Renta 4 : European opening with slight gains (Eurostoxx futures +0.4%, S&P futures -0.1%), on a day of numerous 4Q22 results in Spain. In the background, and on the day that marks one year of war in Ukraine, a peace proposal presented by China that does not seem to have the support of the US and the EU.
Today’s macro focus will be on the US core private consumption deflator (the Fed’s preferred inflation measure), which could continue to moderate in January (+4.3%e vs +4.4% previously), although the risk is to the upside, in line with last week’s CPI and producer prices. Today’s final consumer confidence data from the University of Michigan will also confirm the rebound in consumers’ 1-year inflation expectations (+4.2% vs +3.9% previously), breaking a 10-month downward trend. All this in a context in which the labour market remains stronger than expected, as yesterday’s better-than-expected weekly unemployment report showed. An environment that supports the idea of a Fed Funds ceiling around 5.25%-5.5% (vs 4.5%-4.75% now) and maintenance at these levels in 2023.
In the Eurozone, January final CPI was revised upwards yesterday, both headline +8.6% (vs +8.5% preliminary and +9.2% previous) and core +5.3% (vs +5.2% preliminary and previous), reinforcing the idea of uncomfortably high inflation versus the 2% target, which augurs more rate hikes by the ECB (target level discounted by the market, 3.5%-3.75%).
We have also heard that Japan’s CPI, which continued to rise in January (+4.3% overall and +3.2% core against previous forecasts of +4% and +3% respectively), conditioning the future monetary policy of the Bank of Japan, which is the only major central bank with an ultra-expansionary monetary policy and whose current governor (Kuroda) will be replaced in April. The future governor, Kazuo Ueda, at his confirmation hearing, has today shown himself willing to maintain monetary stimuli for the time being, without rushing to move forward with monetary normalisation, which has supported the stock market (Nikkei +1%) and allowed stability in IRRs (around 0.5%, the ceiling allowed in the 10-year) and the Yen (-6% in the last month after a previous advance of 16% before the start of the exit from the ultra-expansionary monetary policy announced in October). However, the context of rising inflation will foreseeably lead to a gradual abandonment of stimuli, with Ueda suggesting a first rate hike from April onwards.
