Market movers today
Emerging markets continue to be the focal point. As long as this is the case financial markets will take the lead from the development in the EM currencies and macroeconomic data will be of secondary importance. No specific event risk in the EM calendar today. In China the New Year holiday will begin tomorrow, meaning that the news flow from China will dry out next week. However, China's official manufacturing PMI will still be released on Saturday, so this could be the next important event.
In the US the first estimate for Q4 GDP growth will be released. It should confirm that growth in Q4 was strong despite the uncertainty from the government shutdown. A little above consensus we expect GDP growth to have been a solid 3.5% q/q ann. in Q4 driven particularly by strong private consumption.
In Europe we expect today's German inflation data to confirm continued downward pressure on inflation, fuelling the case for an ECB rate cut further. We expect HICP-inflation in Germany to have eased to 1.1% y/y in January down from 1.2% y/y in the previous month driven by both lower energy and food price inflation. In Spain the central bank has already indicated that GDP expanded 0.3% q/q in Q4 (the highest growth rate in six years) so the official release today will probably not have a substantial market impact.
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