Wholesale prices in Japan are rising faster than expected
Japan’s producer prices, or wholesale prices, rose 10.2% in December from a yr earlier, in line with data official data.
That is greater than the 9.5% increase expected by economists polled by Reuters and marks the third straight increase in monthly readings.
Domestic producer prices rose 0.5% on a monthly basis, also above expectations to see a rise of 0.3%.
— Jihye Lee
Week ahead: China’s industrial production, retail sales, GDP and Bank of Japan rate of interest decision
Within the week starting January 16, quite a lot of economic data is predicted – including China’s industrial production and gross domestic product, in addition to the Bank of Japan’s decision on rates of interest.
On Monday, South Korea will publish revised trade data and Indonesia will publish its trade balance for December. India is resulting from release its wholesale price index, which economists polled by Reuters said fell to five.6% in December.
On Tuesday, China will release data on retail sales, industrial production, municipal investment in fixed assets for December and gross domestic product for the quarter. On the identical day, Singapore will publish its non-oil export results for December.
The Bank of Japan will end its monetary policy meeting on Wednesday and can likely keep rates of interest very low. Investors might be in search of clues as to who could possibly be Governor Haruhiko Kuroda’s successor and a possible policy shift.
Japan is resulting from release November machine orders on the identical day, while Malaysia is releasing December trade figures.
On Thursday, Malaysia’s central bank will announce its rate of interest and Australia will release employment data.
China is resulting from release its one-year and five-year rates of interest on Friday. The Japanese consumer price index for December can be expected.
— Jihye Lee
Inflation outlook weakens again, with investors fully pricing in a quarter-point rate hike
Declining consumer inflation expectations coincide with expectations that the Federal Reserve is more likely to lower the extent of rate of interest hikes in a couple of weeks and shortly end them altogether.
The University of Michigan Consumer Sentiment Survey on Friday showed the annual inflation outlook fell to 4%, the third consecutive monthly decline and lowest level since April 2021.
At the identical time, investors set a 94.2% probability of an rate of interest hike of 0.25 percentage points on February 1, when the following two-day Fed meeting ends. This marks one other smaller move than the 0.5 percentage point hike in December, which was itself a slowdown from 4 straight 0.75 percentage point hikes.
“Inflation expectations are well anchored and improving as price pressures ease across many sectors. The Fed is more likely to raise the rate of interest by 0.25% at its upcoming meeting this month,” said Jeffrey Roach, chief economist at LPL Financial. “We should not be surprised if the Fed starts talking a few halt within the near future.”
—Jeff Cox
Consumer sentiment is rising for the second month in a row
The University of Michigan said its Consumer Sentiment Index rose for the second month in a row, even though it stays at a historic low. The index rose to 64.6 from 59.7 in December. Nonetheless, it still stays about 4% below the previous yr’s level.
“Uncertainty about each measures of inflation expectations stays high, and changes in global aspects in the approaching months could reverse the recent improvement,” said Joanne Hsu, director of the Consumer Survey.
— Fred Imbert
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How will the Fed react to falling inflation, bank president’s warnings about recession?
A negative inflation reading on Thursday coupled with warnings from major banks of a light recession on Friday could possibly be an indication that the Fed is about to pause and even cut rates of interest this yr, but that will require one other change of direction from the central bank.
“You do not have to agree with Fed policy to imagine it,” said Lauren Goodwin, an economist and portfolio strategist at Recent York Life Investments.
Goodwin identified that an awesome majority of voting Fed members on the last meeting predicted a Fed funds rate of 5% or higher this yr. And given the concerns some central bankers have expressed about the implications of a pause too early, they might be determined to hit that focus on.
“With a comparatively high degree of unification and conviction, they said they were going to boost the rate of interest to 25 basis points above what the market was saying. And admittedly, unless we see a rapid slowdown in inflation or a slump in economic growth… I do not think they’ll change their minds,” Goodwin added.
—Jesse Pound