Old Wisdom, New Resolutions!
The time-tested words of wisdom proving right: When the crowd has been piling into a single idea -they've often gotten it dead wrong.
Stronger-than-expected U.S. retail sales in December (surge in control group sales means upside risk for Q4 PCE - With 12 full months of data, the largest gain in 2023 was bars and restaurants, which were up 11.3%)
NAHB shows higher confidence on the heels of lower mortgage rates. John Williams declines to offer any policy commentary during an anticipated speech and Beige Book the most aptly named release ...just, dull.
UK Inflation data just showed the mirror to markets - higher taxes to fund massive govt spending (inevitable everywhere) can feed into inflation- similar undertone in all messages from central bankers on both sides of Atlantic -ECB continues to stamp out rate cut bets while Fed lets data do the work for them.
Lagarde leaned into “data-dependency” rhetoric - Vasle said it’s premature to expect the first-rate cuts at the beginning of Q2. Relative buoyancy of EUR belies very weak macros in EZ specifically in Germany.
Longer it stays below 1.0930, greater the potential for decline.
Chinese economy has long suffered from inefficient capital allocation & resource misallocation- short-term prosperity often obscures these substantive issues- China’s Debt-to-GDP Ratio rises to Record 286.1%-
Japanification is complete - currency has to weaken now.
U.K. inflation "unexpectedly" picked up to 4% annual growth and a 0.4% gain for Dec,
(In August, U.K. raised its duty on alcohol)
To be contained between 1.2638 NY low & 1.2696 London high. (There is focus on the UK budget on 6 March, where tax cuts are on the agenda)
Adding fuel to the fire, Expansion of tax exemptions under NISA programme spurred retail investors in foreign stocks influencing the USD/JPY rise. Likelihood grows for much bigger gains to retest 149.17- 76.4% retrace of 151.92 to 140.27 (Nov to Dec).
No surprise, oblivious of all that happening elsewhere, USDINR within its contours.