HomeContributorsFundamental AnalysisUK GDP Reading Above Expectations

UK GDP Reading Above Expectations

Notes/Observations

  • UK Q4 GDP data beat expectations; Optimism bubble for growth down the road as Covid-19 case rates, and more recently hospitalizations, are falling fast
  • GDP data also better for Norway and Poland in session

Asia

  • Australia’s Victoria state to enter a 5-day lockdown to contain an outbreak of the virulent UK strain
  • Japan Econ Min Nishimura stated that the govt would maintain its State of Emergency in 10 regions
  • Japan Fin Min Aso reiterated stance that the domestic economy remained in severe shape; Some foreign economies showing recovery signs
  • Lunar New Holiday keeping China, South Korea, Singapore and Hong Kong closed

Europe

  • Five-Star Party voted in online member survey and saw 59% of the party in favor of supporting a Draghi govt
  • ECB’s Weidmann (Germany) stated that he saw an increase in domestic CPI this year
  • BOE’s Haldane (chief economist): country’s economic recovery should be one to remember after a year to forget. Predicted a spending boom when COVID restrictions are lifted

Americas

  • Fed’s Harker (non-voter in 2021) stated that might see a spike in inflation but did not expect it to run out of control; doesn’t see inflation roaring past 2% anytime soon
  • House Ways and Means Committee advanced stimulus legislation that includes $1,400 stimulus payments
  • House Speaker Pelosi expected lawmakers to complete legislation on Covid-19 relief bill by the end of February.
  • Congressional Budget Office (CBO) projected FY21 budget deficit at $2.26T v prior $1.81T outlook but noted its forecasts included Dec stimulus but not President Biden’s COVID relief proposals
  • Mexico Central Bank (Banxico) cut its Overnight Rate by 25bps to 4.00% (as expected) with the decision to cut being unanimous

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 -0.08% at 411.04, FTSE -0.94% at 7,962.00, DAX -0.61% at 13,955.95, CAC-40 -0.03% at 5,668.17, IBEX-35 -0.94% at 7,962.00, FTSE MIB -0.39% at 23,217.50, SMI -0.11% at 10,841.33, S&P 500 Futures -0.24%]
  • Market Focal Points/Key Themes: European indices open broadly lower and remained in the red as the session wore on; lack of risk appetite attributed to worries of covid mutations after AstraZeneca acknowledge could take up to 9 months to develop vaccine for strains; sectors among better performers are real estate and technology; consumer discretionary and materials sectors trending to the downside; Ant Group signs payments JV with Russian firms; reportedly MGM looking at Entain acquisition; earnings expected in the upcoming US session include Moody’s, Huntsman, Dominion Energy and Newell Brands

Equities

  • Consumer discretionary: Flow Traders [FLOW.NL] +9% (earnings)
  • Financials: ING [INGA.NL] +5% (earnings)
  • Industrials: Jet2 [JET2.UK] -7% (placement)
  • Telecom: Eutelsat [ETL.FR] +8% (earnings)

Speakers

  • ECB’s Makhlouf (Ireland): Irish economy had performed better than expected but did not see any quick changes to rate outlook
  • EU Commission President Von Der Leyen: Initial funds from Recovery Fund might be dispersed by mid-2021
  • Chancellor of the Exchequer Sunak (Fin Min): Next stage of economic support to be set out at the March budget
  • Sweden Central Bank (Riksbank): To expend testing of technical solution for the e-Krona; no decision on any such issuance
  • Romania Finance Ministry noted that the 2021 total gross funding was seen around RON130B
  • Russia Foreign Min Lavrov stated that it was prepared to break off relationship with EU if the bloc imposed sanctions that damaged Russia’s economy.

Currencies/ Fixed Income

  • GBP/USD failed to capitalize on better Q4 GDP data for the UK as the pair hovered below the 1.38 area.. Optimism has been bubbling for growth outlook as Covid-19 case rates and recent hospitalizations were falling fast. BOE members have been predicting a consumer spending boom when COVID restrictions weare lifted
  • The 10-year Italian-German government bond yield spread continued to narrow below 90bps. Most recent tightening aide by Five-Star Party vote in favor of supporting a Draghi govt

Economic data

  • (FI) Finland Dec Current Account Balance: €2.0B v €0.4B prior
  • (UK) Dec Monthly GDP M/M: 1.2% v 1.0%e
  • (UK) Q4 Preliminary GDP Q/Q: 1.0% v 0.5%e; Y/Y: -7.8% v -8.1%e
  • (UK) Q4 Preliminary Private Consumption Q/Q: -0.2% v -0.2%e; Government Spending Q/Q: 6.4% v 1.3%e; Gross Fixed Capital Formation Q/Q: +2.1% v -1.0%e; Exports Q/Q: +0.1% v +6.4%e; Imports Q/Q: 8.9% v 11.0%e
  • (UK) Q4 Preliminary Total Business Investment Q/Q: +1.3% v -1.3%e; Y/Y: -10.3% v -19.2% prior
  • (UK) Dec Industrial Production M/M: 0.2% v 0.5%e; Y/Y: -3.3% v -3.7%e
  • (UK) Dec Manufacturing Production M/M: 0.3% v 0.7%e; Y/Y: -2.5% v -3.2%e
  • (UK) Dec Construction Output M/M: -2.9% v +0.5%e; Y/Y: -3.9% v -0.2%e
  • (UK) Dec Index of Services M/M: 1.7% v 1.0%e; 3M/3M: 0.6% v 0.0%e
  • (UK) Dec Visible Trade Balance: -£14.3B v -£15.0Be; Total Trade Balance: -£6.2B v -£5.8Be; Trade Balance Non EU: -¥5.2B v -£5.9B prior
  • (NO) Norway Q4 Overall GDP Q/Q: 0.6% v 0.5%e; GDP Mainland Q/Q: 1.9% v 1.3%e
  • (NO) Norway Dec Overall GDP M/M: 1.4% v 0.2% prior; GDP Mainland M/M: +1.0% v -0.2%e
  • (RO) Romania Jan CPI M/M: 1.3% v 0.9%e; Y/Y: 3.0% v 2.5%e
  • (TR) Turkey Central Bank Feb TCMB Survey of Expectations: Next 12 Months: 10.4% v 10.5% prior
  • (TR) Turkey Dec Current Account Balance: -$3.2B v -$3.7Be
  • (TR) Turkey Dec Industrial Production M/M: 1.3% v 0.9%e; Y/Y: 9.0% v 8.3%e
  • (CH) Swiss Jan CPI M/M: 0.1% v 0.0%e; Y/Y: -0.5% v -0.6%e; CPI Core Y/Y: 0.0% v -0.3%e
  • (ES) Spain Jan Final CPI M/M: 0.0% v 0.1%e; Y/Y: 0.5% v 0.6%e
  • (ES) Spain Jan Final CPI EU Harmonized M/M: -0.4% v -0.3%; Y/Y: 0.4% v 0.6%e
  • (ES) Spain Jan CPI Core M/M: -1.0% v 0.0% prior; Y/Y: 0.6% v 0.1% prior
  • (CZ) Czech Jan CPI M/M: 1.3% v 0.9%e; Y/Y: 2.2% v 1.7%e
  • (CZ) Czech Dec Export Price Index Y/Y: 2.3% v 2.0% prior; Import Price Index Y/Y: -0.7% v -0.9% prior
  • (HU) Hungary Jan CPI M/M: 0.9% v 0.9%e; Y/Y: 2.7% v 2.7%e
  • (RU) Russia Narrow Money Supply w/e Feb 5th (RUB): 13.69T v 13.59T prior
  • (PL) Poland Q4 Preliminary GDP Q/Q: -0.7% v -1.0%e; Y/Y: -2.8% v -3.0%e

Fixed income Issuance

  • (ZA) South Africa sold total ZAR1.615B vs. ZAR2.0B indicated in 2029, 2038 and 2046 I/L Bonds

Looking Ahead

  • G7 finance ministers to meet and discuss Emerging Market debt and implementation of digital taxes and central bank digital currencies
  • 05:10 (EU) Daily ECB Liquidity Stats
  • 05:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: Expected to leave Key 1-Week Auction Rate unchanged at 4.25%
  • 06:00 (IE) Ireland Dec Property Prices M/M: No est v 0.4% prior; Y/Y: No est v 0.2% prior
  • 06:00 (PT) Portugal Q4 Labour Costs Y/Y: No est v 6.0% prior
  • 06:00 (BR) Brazil Feb FGV Inflation IGP-10 M/M: 2.6%e v 1.3% prior
  • 06:00 (UK) DMO to sell £2.5B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £1.0B respectively)
  • 06:30 (IN) India Weekly Forex Reserve w/e Feb 5th: No est v $590.2B prior
  • 06:45 (US) Daily Libor Fixing
  • 07:00 (IN) India announces upcoming bill issuance (held on Wed)
  • 07:00 (IN) India Dec Industrial Production Y/Y: -0.2%e v -1.9% prior
  • 07:00 (IN) India Jan CPI Y/Y: 4.4%e v 4.6% prior
  • 07:00 (BR) Brazil Dec Economic Activity Index (Monthly GDP) M/M: 0.4%e v 0.6% prior; Y/Y: +0.9%e v -0.8% prior
  • 07:00 (VZ) Czech Central Bank to comment on CPI data
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming upcoming bond issuance
  • 08:30 (CA) Canada Dec Wholesale Trade Sales M/M: -1.7%e v +0.7% prior; Manufacturing Sales M/M: No est v -0.6% prior
  • 10:00 (US) Feb Preliminary University of Michigan Confidence
  • 10:00 (CO) Colombia Dec Manufacturing Production Y/Y: +0.8%e v -0.2% prior
  • 10:00 (CO) Colombia Dec Retail Sales Y/Y: 2.0%e v 4.1% prior
  • 11:00 (EU) Potential sovereign ratings after European close(S&P on Sweden sovereign rating; Moody’s on Ireland sovereign rating and Canadian rating agency DBRS on Belgium sovereign rating)
  • 13:00 (US) Weekly Baker Hughes Rig Count
  • 14:00 (CO) Colombia Dec Industrial Production Y/Y: No est v -7.1% prior

 

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