- US & Australian consumer confidence to be highlighted
- UK Q4 GDP ought to be flattered by inflation and global supply recovery
- US inflation in focus, expectation is for further gains
Monday sees the release of US Consumer Credit Data for December. Having jumped to a decade high of almost $40billion in November, the figure is expected to show a marked reversion this week. However even a print between $15-$20 billion would be well within range of longer term averages, rather than necessarily being seen as a reflection of weakening consumer confidence over fear of rate hikes. This number will however likely be closely followed as the year progresses, with further weakness having the ability to ask questions whether the Fed’s stance may be too aggressive.
On Tuesday, the British Retail Consortium will publish its sakes monitor data for January. Despite a reported uptick in grocery spend in December driven by Christmas celebrations, changes to government COIVD guidance hit other sectors and resulted in month-on-month growth of just 0.6%. On an annualised basis the reading still showed significant growth, but bearing in mind this isn’t adjusted for inflation, anything below zero this time round will reflect a significant drop in spending, underlining the impact of the cost of living squeeze.
Wednesday sees the release of Westpac Consumer Confidence data for February. Sentiment here is deteriorating, but with Sino-Australian trade on the up fuelled by that Chinese rate hike, will this be sufficient to lift the mood, or is the mounting threat of rate hikes from the RBA going to dampen demand? A month on month decline of around 0.2% is forecast, marking a significant improvement on January’s 2% decline.
Also on Wednesday, US Wholesale Inventories for December will be published. Obviously the challenge here is the age of that data when the underlying market is moving so quickly, so any fall out may be limited. It can also be a challenging one to interpret but solid growth here will not only boost GDP but also stand to highlight that global supply chain challenges may be easing up. Forecasts are for a reading just over 2%, up from the 1.4% in November and any overshoot is likely to be widely applauded.
Thursday sees US Inflation Data for January published and this is tipped to keep climbing. Having hit an almost 40 year high of 7% in December, another modest increase is expected – and quite likely priced in already – here. With that in mind, any market reaction may be more likely off a modest undershoot, although with energy prices remaining under pressure this seems highly unlikely.
On Friday morning, the first estimate of Q4 UK GDP will be issued. This is expected to come in close to the Q3 figure of 6.8%, again a figure that may lend support to the idea that global supply chains are flowing better, but any marked shortfall has the potential to rattle confidence. Inflationary pressures should also be serving to flatter this figure in the coming months.
Finally, US Michigan Consumer Sentiment for February will be released. Ongoing COVID concerns, mounting inflation threats and the prospect of rising interest rates are all combining to create a negative outlook here and the number is now wallowing at levels even lower than was seen at the start of the pandemic. By all accounts this should be another red flag for US consumer facing stocks with overinflated valuations – as some are already finding out, the profitability can’t run for ever.
Article by Tony Cross
of Monk Communications