UK retail sales volume grew 1.9% mom in January, well above expectation of 1.0% mom. Ex-fuel sales rose 1.7% mom, above expectation of 1.2% mom. Comparing with the sale month a year earlier, retail sales rose 9.1% yoy while ex-fuel sales rose 7.2% yoy.
Comparing with prepandemic level in February 2020, retail sales was 3.6% above that level while ex-fuel sales was 4.4% above.
Japan all item CPI slowed from 0.8% yoy to 0.5% yoy in January, below expectation of 0.6% yoy. CPI core (all item less fresh food) dropped from 0.5% yoy to 0.2% yoy, below expectation of 0.3% yoy. CPI core-core (all item less fresh food and energy), dropped from -0.7% yoy to -1.1% yoy, below expectation of -0.7% yoy.
Finance Minister Shunichi Suzuki said recent prices rises were “driven mostly by increases in energy costs”, though forex moves also has had some impact. He added, “if inflation rises before improvement in job market, wage hikes kick in, that could affect consumption.”
Cleveland Fed President Loretta Mester said yesterday, “I believe it will be appropriate to move the funds rate up in March and follow with further increases in the coming months.”
“If by mid-year, I assess that inflation is not going to moderate as expected, then I would support removing accommodation at a faster pace over the second half of the year,” she added.
Mester still expects inflation to remain above 2% this year and next. Moderation in inflation is “conditioned on the FOMC taking appropriate action to transition away from the current emergency levels of accommodation.”
“We will need to convey the overall trajectory of policy and give the rationale for our policy decisions based on our assessment of the outlook and risks around the outlook, which are informed by economic and financial developments,” Mester said. “This change in communications will provide a better sense of the FOMC’s policy reaction function and should not be interpreted as the FOMC backing away from transparency.”
St. Louis Federal Reserve President James Bullard warned during a panel talk at Columbia University, “we’re at more risk now than we’ve been in a generation that this (inflation) could get out of control.”
One scenario would be, “a new surprise that hits us that we can’t anticipate right now, but we would have even more inflation,” he said. “That’s the kind of situation that we want to … make sure it doesn’t occur.”
“Overall, I’d say there’s been too much emphasis and too much mindshare devoted to the idea that inflation will dissipate at some point in the future,” Bullard said. “We’re at risk that inflation won’t dissipate, and 2022 will be the second year in a row of quite high inflation. So that’s why given this situation, the Fed should move faster and more aggressively than we would have in other circumstances.”
ECB Chief Economist Philip Lane said in a speech that “medium-term inflation expectations have been increasing from a low base towards the two per cent inflation target over the last year, even before the energy shock.”
“There are several factors indicating that the excessively-low inflation environment that prevailed from 2014 to2019 (a period over which inflation averaged just 0.9 per cent) might not re-emerge even after the pandemic cycle is over,” he added.
“If the medium-term inflation dynamic is anticipated to stabilise around the two per cent target, this will permit a gradual normalisation of monetary policy,” he said. “Whereas if inflation threatens to persist significantly above the two per cent target over the medium term, a tightening of monetary policy will be required.”
US initial jobless claims rose 23k to 248k in the week ending February 12, above expectation of 219k. Four-week moving average of initial claims dropped -11k to 243k.
Continuing claims dropped -25k to 1593k in the week ending February 5. Four-week moving average of continuing claims dropped -8k to 1626k.
Gold’s rally resumes today by taking out 1879.24 temporary top and hits as high as 1893.24 so far, just shy of 1900 handle. Further rally is now expected as long as 1844.30 support holds. Current rise is seen as part of the whole rally from 1682.60. Gold should break through 1916.30 resistance to 100% projection of 1682.60 to 1877.05 from 1752.12 at 1946.57.
Meanwhile, it should be noted that firstly, firm break of 1916.30 should confirm completion of the correction from 2074.84 at at 1682.60. Secondly, further break of 1946.57 will suggest medium term up side acceleration. In this case, retest of 2074.84 high should be quickly within reach.
Australia employment grew 12.9k in January, better than expectation of 0k. Full-time jobs dropped -17k but part-time jobs rose 30k.
Unemployment rate was unchanged at 4.2%, but participation rate rose 0.1% to 66.2%. Monthly hours worked, however, dropped -8.8% mom.
Bjorn Jarvis, head of labour statistics at the ABS, “While we again saw higher than usual numbers of people taking annual leave – even more so than last year – the 8.8 per cent fall in hours worked in January 2022 also reflected much higher than usual numbers of people on sick leave.”
“As with earlier rapid changes in the labour market during the pandemic, hours continue to be much more affected than employment. This reflects people working reduced or no hours, without necessarily losing their jobs.”
Japan exports rose 9.6% yoy to JPY 6332B in January. Imports surged 39.6% yoy to record JPY 8523B. Trade balance came in as JPY -2191B deficit, largest single month deficit since January 2014.
Exports to China dropped -5.4% yoy, first contraction in 19 months. Imports from China rose 23.7% yoy, highest in four months. Exports to US rose 11.5% yoy.
In seasonally adjusted term, exports rose 0.1% mom to JPY 7355B. Imports rose 4.9% mom to JPY 8287B. Trade balance was at JPY -933B deficit.
Minneapolis Fed President Neel Kashkari said yesterday that it’s “appropriate” to start normalizing policy. However, he cautioned “let’s not overdo it”. “If we raise rates really aggressively, we run the risk of slamming the brakes on the economy, putting the economy into recession, which would then — we’d be crashing back down into this low inflation environment,” he warned.
Kashkari also revealed that he and his family had COVID earlier this year, and “a lot of families are experiencing what we just experienced.” He added “this will be a while” before people can be comfortably living with the coronavirus.
The minutes of the January FOMC meeting contained little surprises. Fed acknowledged that ” recent inflation readings had continued to significantly exceed the Committee’s longer-run goal and elevated inflation was persisting longer than they had anticipated.” And, ” elevated inflation was a burden on U.S. households, particularly those who were least able to pay higher prices for essential goods and services.”
Most participants noted, “if inflation does not move down as they expect, it would be appropriate for the Committee to remove policy accommodation at a faster pace than they currently anticipate.” But, “the appropriate path of policy would depend on economic and financial developments and their implications for the outlook and the risks around the outlook.”
Fed officials “will be updating their assessments of the appropriate setting for the policy stance at each meeting.”
Meanwhile, ” in light of the current high level of the Federal Reserve’s securities holdings, a significant reduction in the size of the balance sheet would likely be appropriate.”
US commercial crude oil inventories rose 1.1m barrels in the week ending February 11. At 411.5m barrels, oil inventories are about -10% below the five year average for this time of the year.
Gasoline inventories dropped -1.3m barrels. Distillate dropped -1.6m barrels. Propane/propylene dropped -5.9m barrels. Total commercial petroleum inventories dropped -9.9m barrels.
WTI crude oil is back above 94, as it rebounded after drawing support from 4 hour 55 EMA, as well as near term rising channel support. The development maintains near term bullishness and focus is now back on 95.98 resistance. Break there will resume near term up trend to 100% projection of 82.42 to 93.52 from 88.66 at 99.76 next. IN any case, outlook will now stay bullish as long as 90.80 support holds.
US retail sales rose 3.8% mom to USD 649.8B in January above expectation of 1.8% mom. Ex-auto sales rose 3.3% mom, above expectation of 1.0% mom. Ex-gasoline sales rose 4.2% mom. Ex-auto, ex-gasoline sales rose 3.8% mom. Retail trade rose 4.4% mom.
Total sales for November 21 through January 2022 period were up 16.1% from the same period a year ago.
Canada CPI jumped from 4.8% yoy to 5.1% yoy in January, above expectation of 4.8% yoy. Also, inflation surpassed 5% for the first time since September 1991. On monthly basis, CPI rose 0.9% mom, above expectation of 0.6% mom, highest since January 2017.
Excluding gasoline, CPI rose 4.3% yoy, highest since the introduction of the index in 1999. Prices for services was unchanged at 3.4% yoy. Prices for goods accelerated from 6.8% yoy to 7.2% yoy.
CPI common rose from 2.1% yoy to 2.3% yoy, above expectation of 2.1% yoy. CPI median rose from 3.1% yoy to 3.3% yoy, above expectation of 3.1% yoy. CPI trimmed rose from 3.8% yoy to 4.0% yoy, above expectation of 3.7% yoy.
Eurozone industrial production rose 1.2% mom in December, well above expectation of 0.3% mom. Production of capital goods rose by 2.6%, intermediate goods by 0.5% and non-durable consumer goods by 0.4%, while production of durable consumer goods fell by -0.3% and energy by -0.8%.
EU industrial production rose 0.7% mom. Among Member States for which data are available, the largest monthly increases were registered in Ireland (+10.3%), Lithuania (+6.2%) and Luxembourg (+5.1%). The highest decreases were observed in Czechia (-2.9%), Austria (-1.1%) and Italy (-1.0%).
Speaking in the parliament, BoJ Governor Haruhiko Kuroda said there is no plan to change the band for 10-year JGB yield to fluctuate in. He added, “our basic approach is to buy a sufficient amount of bonds to allow 10-year JGB to move 25 basis points up and down each around our 0% target.”
“How much JGB BoJ will buy to defend its yield target depends on market conditions at the time,” he said. “BoJ’s fixed-rate bond-buying offer was made in light of such unusual market situation. If market conditions become unusual again, BoJ will of course use tools such as fixed-rate market operation.”
UK CPI rose further from 5.4% yoy to 5.5% yoy in January, matched expectations. That’s the highest level in the National Statistics series since January 1997. It was last higher in the historical modelled series in March 1992, which as at 7.1%. CPI core rose from 4.2% yoy to 4.3% yoy, above expectation of 4.3% yoy.
Also released, PPI input came in at 0.9% mom, 13.6% yoy, versus expectation of 0.7% mom, 14.2% yoy. PPI output was at 1.2% mom, 9.9% yoy, versus expectation of 0.6% mom, 9.4% yoy. PPI output core was at 1.1% mom, 0.7% yoy, versus expectation of 0.7% mom, 9.0% yoy.
Australia Westpac-Melbourne Institute leading index rose from -0.1% to 0.4% in December. That’s the first positive, above trend, read on the since Since Delta outbreak last August. The index signalled that growth outlook has improved with above trend growth over the next three to nine months.
Westpac expects contraction in spending in January due to Omicron, and zero growth in GDP in Q1. But the economy is expected to bounce back strongly over the rest of 2022, with a solid 5.5% growth for the year overall.
Westpac also continues to expect interest rate hike by RBA before August meeting.
ECB Executive Board member Isabel Schnabel said in an interview, ” it has become increasingly likely that inflation is going to stabilise around our 2 per cent target over the medium term.” There, “we should start thinking about a gradual normalization of our policy.”
“With the most recent data, however, the risk of acting too late has increased and therefore we need a careful reassessment of the inflation outlook,” she added.
Schnabel also pointed to a “demand component” in inflation in rising wages, in addition to energy prices and supply chain bottlenecks. She added, “we cannot simply look through everything, especially if inflation now becomes more broad-based and more persistent than we originally thought.”
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Canada retail sales dropped -1.8% mom in Dec, to rebound by 2.4% in Jan
Canada retail sales dropped -1.8% mom to CAD 57.0B in December, better than expectation of -2.1%. Sales were down in 8 of 11 subsectors, representing 62.9% of retail trade. Excluding gasoline stations and motor vehicle and parts, sales dropped -2.4% mom.
For Q4, retail sales were up 1.7%, marking its second consecutive quarterly increase.
Advance estimate suggests sales rose 2.4% in January.
Full release here.