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Weekly Economic & Financial Commentary: The U.S. Economy Continues to Start 2021 on a High Note

U.S. Review The U.S. Economy Continues to Start 2021 on a High Note In January, personal spending increased at a robust 2.4% pace, while personal income soared 10.0%. The core PCE deflator rose 0.3% during the month and 1.5% over the year. Fed Chair Powell testified in front of Congress...

Week Ahead: When Doves Cry

Fed Chairman Powell provided testimony to Congress last week regarding Monetary Policy.  He noted that the Fed was in no hurry to take its foot off the easing pedal and that although inflation expectations have been creeping into the markets, the Fed views this as a sign of confidence...

Week Ahead – Rising Yields Spook Markets

Powell fails to ease concerns Everyone is watching the bond markets at the moment, as yields accelerate higher and investors become increasingly anxious. That is dominating the headlines and it’s unlikely to change next week, with the jobs report on Friday now even more significant. Country US It seems Wall Street is much...

Week Ahead – NFP to Guide Yields, RBA Could be a Yawn, Pound Turns to UK Budget for Boost

As a new month starts, investors will have their eyes locked on the latest nonfarm payrolls numbers out of the United States amid an accelerating selloff in bond markets. The Reserve Bank of Australia’s policy meeting will be the only central bank gathering of the week but is unlikely...

Forward Guidance: Canada GDP to Confirm Economy Weathered Second Wave

We expect GDP rose 7.5% at an annualized rate in Q4 of last year, on the back of a 0.3% increase in December output (in line with Statistics Canada’s preliminary estimate a month ago.) That would mean about 80% of the collapse in activity last spring was retraced by...

Weekly Focus – Spill Over from Continuing Yield Increase

Yields continued up this week; US 10yr government bond yields reached a one-year high. Oil prices increased above USD67/barrel and industrial metals, particularly copper, have accelerated further as well, weakening safe haven currencies like JPY and CHF. This development has been backed by more positive vaccine news and a...

Forex Forecast And Cryptocurrencies Forecast

First, a review of last week’s events: EUR/USD. The sharp rise in bond yields in the US and Europe has hit not only the stock market, but also the “carry trade”, providing support to funding currencies, primarily the euro and the US dollar. Recall that the funding currency is usually...

Weekly Economic & Financial Commentary: Q4 GDP Data Top Expectations, but Q1-2021 Looking Shakier

U.S. Review A Consumer and His Stimulus Check Are Soon Parted Stimulus checks from the year-end COVID-relief package arrived in January, and we learned this week that retailers raked in more money during that month than they have since June. Every single store category reported increasing sales during the month....

The Weekly Bottom Line: Economy Progresses in January

U.S. Highlights The week's data confirmed that the U.S. economy continued to make progress early in 2021. That progress looks likely to get a substantial shot in the arm from the $1.9 trillion American Rescue Plan in the coming weeks. We have upgraded our U.S. forecast to include the...

Forward Guidance: Canadian Business Investment Intentions to Show Two Gear Economy

Divergence between the hospitality sector and the broader economy has been a key theme in recent months. Next week’s release of (the usually closely watched) annual investment intentions survey from Statistics Canada will likely show a similar divergence. The Bank of Canada’s Q4 Business Outlook Survey already flagged a...

Week Ahead: Powell vs Inflation

Inflation and inflation components of economic data were sharply stronger last week than in previous months.  Yet, one central bank speaker after the next continued to march out and say that inflation is nothing to worry about.  This week, Fed Chairman Powell will be front and center, as he...

Week Ahead – Powell to the Rescue

Rising yields spook investors Jerome Powell’s appearances in Congress next week may come at the perfect time. Rising yields have made investors nervous and the Fed Chair may be the person to put their minds at ease. Meanwhile, Boris Johnson will lay out plans for the easing of the lockdown...

Week Ahead – Dollar Realigns With US Fundamentals, RBNZ Meets

There's been a striking change in the dynamics of the FX market lately, with the US dollar no longer trading exclusively as a safe haven and instead reacting to American economic data. Investors have their eyes on the Fed, even if it is too early to price in a...

Weekly Focus – Rising Yields

This week was quiet in terms of data releases but still there were some interesting movements in financial markets. In the fixed income markets, long-term yields rose with the 10yr German government bond yields now trading at -0.33% up from -0.45% in the beginning of the week. US 10yr...

Weekly Economic & Financial Commentary: Mixed Finish to 2020, Soft Start to 2021

U.S. Review Inflation Comes Back in Focus Market attention was concentrated on the January consumer price data, as inflation has come back into focus. There is renewed concern among market participants that inflation is about to take off once the economy re-opens and demand accelerates. But, such concerns have not...

The Weekly Bottom Line: Moving In The Right Direction

U.S. Highlights The headline Consumer Price Index rose 0.3% in January and was up 1.4% year-on-year. Removing food and energy prices, the core index was flat on the month and slowed to 1.4% year-on-year from 1.6% in December. Small business optimism deteriorated for the third month in a row...

Week Ahead: Holidays, Lockdowns, Inflation and Platinum

It’s the Chinese Lunar New Year:  the year of the ox!  However, restrictions are in place to prevent people from traveling over the holiday. Lockdowns are still in full swing in many countries while monetary and fiscal stimulus continue to hold up fragile economies, especially in Europe.  While many...

Week Ahead – Cause for Optimism

Minutes and PMIs eyed Investors are growing increasingly hopeful about the economic outlook and next week’s PMIs will tell us whether businesses share their optimism. Central bank minutes will also provide more insight into whether policy makers are encouraged and what it means for monetary policy. Country US Optimism grows for the US...

Forward Guidance: Flurry of Indicators to Highlight Resilience Through Second Wave

The Canadian economy (outside of the hospitality sector) continued to show resilience through the second wave of lockdowns as households and businesses adapted to tighter restrictions. The more narrowly imposed containment measures this time around, which left the industrial sector and other businesses outside the hospitality and retail sectors...

Week Ahead – Dollar’s Comeback Bid Wobbles ahead of Fed Minutes, Flash PMIs

There will be no shortage of data releases in the coming week, with Japanese GDP, Australian job numbers and European and US flash PMIs being some of the highlights. But markets may still struggle to find new direction as there’s nothing on the horizon that is likely to alter...

Cliff Notes: Optimism Over Recovery Remains Strong

Key insights from the week that was. In February, Westpac-MI consumer sentiment recovered roughly half the ground lost in January. This result leaves sentiment only marginally below the 10-year high achieved in December. Looking at the detail of the report, consumers are clearly very positive on the outlook for the...

Forex and Cryptocurrencies Forecast

First, a review of last week's events: EUR/USD. The dollar has been growing throughout the week, fueled by optimism about the imminent recovery of the US economy. The incidence of coronavirus is down sharply: in just three weeks since the peak, the 7-day moving average has dropped by almost 50%. And...

Weekly Economic & Financial Commentary: International Growth Outlook Still Mixed

U.S. Review Better Numbers Nonfarm employment rebounded in January, with employers adding 49,000 jobs following the prior month's 227,000-job drop. The annual revisions to the prior data provide a more accurate assessment of job losses during last spring's lockdown, as well as the subsequent recovery. Job losses in March and...

The Weekly Bottom Line: A Cautiously Optimistic Week

U.S. Highlights Economic data released this week was balanced enough to re-ignite optimism in financial markets without calling into question the next fiscal support package. Job market data showed a third consecutive decline in the weekly jobless claims as well as moderate progress in payrolls and an unexpected drop...

Forward Guidance: Gradual Easing in Restrictions to Brighten Economic Growth Outlook

Next week will be a quiet week for economic data releases and much of the focus will be centered on reopening plans. Steadily declining COVID case counts across most regions of Canada have already resulted in some easing in containment measures and we expect this will continue. Even as...

Week Ahead: Is the Focus on Stimulus or Inflation?

Markets were back to their old selves last week, as the short squeeze drama surrounding GME subsided. Joe Biden seems to be off to a good start as US President,  as his $1.9 trillion stimulus proposal makes its way through Congress. US Non-Farm Payrolls were in line with expectations,...

Week Ahead – Stimulus Battle Continues

A lively start to the year It’s been an surprisingly lively start to the year, with recent weeks being dominated by retail traders taking on hedge funds and showcasing the power of social media. While that looks to have gone quiet, a repeat performance may not be far away. With...

Can the Dollar and Stocks Keep Climbing Together?

It will be a quiet week, without any central bank meetings and only a handful of data releases. Some remarks by the Fed chief could attract attention, but the overall focus will remain on Congress, where the new relief package is finally taking form. The question for markets is...

Weekly Focus – Light at the End of the Tunnel Increasingly Brighter

On the COVID front most European countries are seeing improvement but governments across Europe are walking a tightrope where cases will likely rise again if restrictions are eased. Most analysis so far have found that the vaccines are effective against new variants - and close to 100% efficacy against...

Cliff Notes: Extraordinary Policy Easing Justified Despite Strong Global Recovery

Key insights from the week that was. For Australia, the past week had a strong focus on monetary policy as the RBA Board met; Governor Lowe spoke at the National Press Club then appeared before Parliament; and lastly, the February Statement on Monetary policy was released. Tuesday’s RBA decision provided an...