5/8/2023 0 Comments Bet countdowns![]() ![]() Recent retail updates have offered encouragement that consumers are still spending, albeit more cautiously, while the construction sector has also shown signs of some improvement. The rebound in Q4 was helped in some part by a strong rebound in consumer spending due to the Football World Cup in Qatar, and today’s final adjustment will hope that this holds, with personal consumption expected to come in at 0.1%. When the numbers were last adjusted the UK economy managed to avoid a technical recession by the skin of its teeth, coming in at 0%, after a -0.2% contraction in Q3. The two are inextricably linked and no central bank will continue to hike rates when financial stability is at stake.īefore today’s flash CPI from the EU, we get the final Q4 GDP numbers out of the UK, which a lot of people in government will be hoping don’t get a downward revision this morning. ![]() If we are to believe ECB President Christine Lagarde there isn’t a trade-off between the two, however, history has taught us that is rarely true. The bigger question remains about what data the ECB is now concerned about, whether it is core CPI, which is set to edge even higher today to 5.7% and a new record high, or whether their focus has now shifted to financial stability. In recent weeks the noises from various ECB policymakers have been becoming increasingly hawkish, however recent events have tempered that somewhat with the last meeting placing much greater emphasis on data dependence. ![]() Headline inflation has been coming down, falling to 8.5% in February, and looks set to fall even more sharply in today’s March flash numbers to 7.1%. Nonetheless despite the sharp falls being seen in headline CPI, the stickiness of core prices is prompting concern amongst ECB policymakers, with yesterday’s Spanish core CPI numbers a timely reminder, of how sticky that part of the equation is.Īt its last meeting, the ECB raised rates by another 50bps, in line with its previous guidance in January, although the timing was slightly unfortunate as it came in the teeth of a banking crisis that saw Swiss bank UBS absorb its rival Credit Suisse.Īgainst such a backdrop the arguments for taking a more measured approach were quite high, especially since core prices saw a rise to a new record high back in February to 5.6%, however, the governing council held its nerve. Putting to one side the performance of the Nasdaq 100, European markets have largely outperformed their US counterparts, as a sharp fall in energy prices and big falls in headline inflation has forced markets to reassess the outlook for the European economy. The Nasdaq 100 on the other hand has managed to defy gravity by rallying an impressive 18%. The German DAX, on the other hand, has managed to reverse most of the losses in the aftermath of the collapse of Credit Suisse and looks set to finish the quarter over 10% higher.Įven US markets have undergone a bit of a crisis of confidence with concern about the effects of much higher rates giving way to concern about the health of the US banking system, which has seen a somewhat choppy quarter, with the Dow looking set to finish where it started the quarter. ![]() As we come to the end of March and the first quarter of 2023, the last two weeks have taken some of the gloss off the FTSE100, after a strong January and February. ![]()
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