Markets
Brent crude prices extend yesterday’s rally with another $2/b move, this time from $70/b to $72/b and confirming a technical break above the $70/b resistance zone. The oil price trades at its highest level since last summer when they spiked towards $80/b in the wake of Operation Midnight Hammer, the US’s strikes on Iranian nuclear sites. Markets are again on high alert over the Iranian situation. Talks in Geneva earlier this week didn’t really result in hoped-for progress, but a two-week deadline instead. The UN’s nuclear watchdog today warned that the US military build-up in the region means that Iran’s window to reach a diplomatic agreement over its atomic activities is at risk of closing. The US gathered the most air power in the Mideast since the 2003 Iraq invasion, according to flight-tracking data and confirmed by a US official to the WSJ. Markets become more aware of the looming threat. Core bonds fail to really play a safe haven role with higher energy prices interfering. Risk sentiment on stock markets sours with European indices losing around 1%. That’s only one day after the EuroStoxx50 set a new all-time high. US stock markets open 0.25% lower. The greenback shines on FX markets for a second straight session. The US currency plays it safe haven role with near term Fed rate cut bets (March) reduced to nearly 0% following last week’s eco data. The trade-weighted dollar (DXY) tests first resistance at 97.99 (from a start at 97.73). EUR/USD (1.1750) is currently already giving away similar support at 1.1761. The same goes for cable which changes hands at 1.3440, below 1.3509 support. EUR/GBP is about to reach a new YtD top north of 0.8750. Even the Japanese yen fails to keep track with the mighty USD, finding its way north of 155, but remains well below first support at 157.76.
US December trade balance data offered a final piece of tomorrow’s US Q4 GDP puzzle. Exports of goods dropped by more than 3%, but this decline can be explained by non‑monetary gold exports. Imports grew strongly again (+3.6% M/M), this time less influenced by gold trade. Our KBC nowcast now predicts 2.74% Q/Qa growth for Q4 (vs +3% consensus); however, if we filter out the gold effects, only 1.6% Q/Qa would remain. Non‑residential investments remain a strong component of our in-house nowcast on the back of AI‑related investment. Weaker December retail sales pushed personal consumption slightly down, but we still expect annualized Q/Q-growth of 2.82% for this component. A first look at Q1 is weaker, based on the data already available, with growth at 1.55%. However, filtering out the gold effects, we would have 1.89% for Q1.
News & Views
Belgian consumer confidence, after reaching its highest point since 2021 in January, saw a fresh decline in February to 1 from 4, the National Bank of Belgium’s monthly survey showed. The composite indicator remains well above the long-term average though. Concerns about year-ahead unemployment in particular have risen sharply. We should add that this worsening comes after consumers in January were never more optimistic on the labour market than at any other point in time in the series’ 40-year history. Households are also more pessimistic about their capacity to save but simultaneously turned more positive on the general economic situation.
A set of below-consensus Polish January economic data reinforce bets for a rate cut by the central bank (NBP) as soon as March. FRA pricing suggests that after lowering the policy rate to 3.75% next month, more cuts may follow further down the line to perhaps as low as 3.25% (50-50% chance) by 2025H2. The zloty weakens slightly to EUR/PLN 4.22 to nevertheless remain near the strongest levels of the past decade. Gross wages last month tumbled 6.1% m/m to be up the same percentage in a yearly perspective, which was the slowest pace in five years. Employment also unexpectedly dropped 0.2% m/m, extending the trend seen in all of 2025 (barring the one-off 0.1% uptick in November). The amount of people having a job is now 0.8% lower than in January of last year. Industrial sales missed expectations big time, dropping 6% m/m (-3% expected) and -1.5% annually, with unusually cold weather said to have had a serious negative impact. Finally, producer prices slipped a monthly 0.3% and push the yearly print to a one-year low of -2.6%.
