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Daily Macroeconomic Digest

Friday 24 March
Flash PMI services on the rise in the US and Eurozone

US: Services PMI (March): 53.8 vs 50.3 expected (prior: 50.6)

  • Sentiment has rebounded with higher new demand and firmer activity. Labor and prices remained positive and continue to rise.

US: Manufacturing PMI (March): 49.3 vs 47 expected (prior: 47.3)

  • Sentiment has improved on production but weakened on new orders and exports.
  • Modest increase in prices with some easing in costs. Modest rise in employment.

Eurozone: PMI Manufacturing (March): 47.1 vs 49 expected (prior: 48.5)

  • The flash index has weakened from the prior month, despite some improvement in the supply chain and the auto sector.
  • The index has decreased in Germany (from 46.3 to 44.4) but was slightly higher in France (from 47.4 to 47.7).
  • New orders were weak while prices remained on the rise despite some easing in costs.

Eurozone: PMI Services (March): 55.6 vs 52.5 expected (prior: 52.7)

  • The flash estimates have pointed to an increase in business confidence, despite turmoil in banks.
  • Sentiment has increased in both France and Germany; by sector, demand was firmer, favoring several sectors such as finance, real estate, industrial services, IT and healthcare.
  • As demand remained strong, momentum in prices also stays strong.

Spain: PPI (Feb.): 2.1% m/m (prior: -2.3%)

  • Prices have rebounded due to energy prices.
  • Yearly trend remained stable at 7.8% y/y.

UK: GFK consumer confidence (March): -36 as expected (prior: -38)

  • Sentiment was marginally less negative; opinions have slightly decreased on personal financial situation but were marginally less negative on future economic situation.

UK: Retail sales (Feb.): 1.2% m/m vs 0.2% expected (prior: 0.9% revised from 0.5%)

  • Sales (in volume terms) were surprisingly sustained for all categories, except households’ good stores. Discounts and labor have underpinned firm consumption, fuelling upside to inflation in services.

UK: PMI Manufacturing (March): 48 vs 49.7 expected (prior: 49.3)

  • First estimates have pointed to slower activity over the month; employment has also turned less favorable.

UK: PMI Services (March): 52.8 vs 53 expected (prior: 53.5)

  • Sentiment has marginally decreased from the prior month.
Thursday 23 March
Key rates on the rise for the BoE, Norges Bank and SNB

US: Initial jobless claims (Mar 18): 191k vs 197k expected (prior: 192k)

  • Continuing claims: 1694 k after 1680 k the prior week.

US: New home sales (Feb.): 640k vs 650k expected (prior: 633k revised from 670k)

  • Some rebound after large downwards revisions to prior months data.
  • 2 districts over 4 have driven the monthly rebound; inventories have marginally decreased over the month.
  • Prices were volatile; median prices have rebounded (2.5% y/y after -0.9% y/y the prior month) but mean prices remained under contraction (-4.5% y/y after 4.3% y/y).

Switzerland: The SNB has increased key rates by 50 bp to 1.50%

  • Inflation remained a concern that justified a 50 bp rate hike to 1.50%. The rise in inflation looks broad-based, driven by electricity, food and tourism.
  • The inflation forecasts have been increased by 0.2-0.3 pp to 2.6% in 2023 and 2% in 2024-24; note the 2% inflation target is supposed to be reached at end of 2024.
  • The statement mentioned that more rate hikes are possible, and the bank could remain active in FX interventions.
  • Growth is expected to be around 1% in 2023 and uncertainties remain on the short term related to foreign economies and turmoil in banks.
  • SNB mentioned that actions have put a halt on the bank crisis, and the bank will provide liquidity in Swiss franc and foreign currencies. Signs of slowdown in housing prices have developed, and vulnerabilities remain in place according to the central bank.

Norway: Norges bank has increased key rates by 25 bp as expected to 3.0%

  • Hawkish statement mentioned further rises in May (and probably June) to contain any inflation-wage growth spiral.

UK: The BoE has increased key rates by 25 bp to 4.25%

  • The bank has hiked by 25 bp after 50 bp the previous meeting. 2 governors were in favor of no change rates and other agreed to hike by 25 bp.
  • Meeting-by-meeting decision should lead to another potential hike in May if inflation and labor stay high or a pause if inflation comes back. Growth is expected to be slightly positive in Q2 after a mild negative Q1 GDP.
  • The bank stated the banking sector is in a good shape. The bank will monitor credit conditions but did not seem to expect more restrictive credit supply.

Turkey: Consumer confidence (March): 80.1 (prior: 82.5)

  • Consumer confidence has decreased on deteriorating future personal financial situation; opinions on economy and purchases have also slightly decreased over the month.

Turkey: The central bank has left key rates unchanged at 8.50%

Wednesday 22 March
UK inflation on re-acceleration

UK: CPI (Feb.): 1.1% m/m vs 0.6% expected (prior: -0.6%)

  • All major prices have strongly accelerated over the month: food clothes, household goods, communication and hotels-restaurants prices have increased more than 1% m/m.
  • Goods and services prices have both strongly accelerated over the month despite signs of slowdown in the economy and past action of the BoE. Yearly trend has accelerated from 10.1% y/y the prior month to 10.4% y/y.

UK: PPI Input prices (Feb.): -0.1% m/m vs -0.2% expected (prior: 0.4% revised from -0.1%)

  • Prices have declined thanks to lower energy prices (-1.1% m/m after -3.5% m/m the prior month). Prices in other sectors were flat or modestly up over the month.
  • Yearly trend has declined from 14.7% y/y to 12.7% y/y.

UK: PPI Output prices (Feb.): -0.3% m/m vs 0.1% expected (prior: 0.5%)

  • Oil and good prices have declined over the month, while food prices were up by 0.8% m/m after 1% m/m the prior month.
  • Yearly trend has declined from 13.5% y/y to 12.1% y/y. Output and input prices have pointed toward lower pressures on costs, while firms have increased further margins and final prices to consumers in several sectors notably in services.

Norway: Unemployment rate (Feb.): 3.6% (prior: 3.5% revised from 3.4%)

  • Unemployment continues to bottom out, from the lows (3%) reached in May 22.

Poland: M3 (Feb.): 1.7% m/m vs 0.9% expected (prior: 0.2%)

  • M3 up by 7.4% y/y after 6.9% y/y prior month.
Tuesday 21 March
Rebounding US existing home sales; weakening German ZEW expectations

US: Existing home sales (Feb.): 4.58M vs 4.2M expected (prior: 4M)

  • Sales have rebounded as long-term interest rates have decreased. Sales of single-family houses have strongly rebounded (+15% m/m) and condo sales were also on the rise.
  • Inventories have decreased but the period a house is on sale has significantly increased compared to past months.
  • Prices have marginally increased over the month, but mean prices declined by 0.2% y/y.
  • First-time buyers have decreased; demand is firmer when rates go lower, particularly in regions where labor remains strong.

Germany: Zew (March): 13 vs 15 expected (prior: 28.1)

  • Expectations among financial community have fallen over the month; views on current situation have also decreased (index at -46.5 after -45.1 the prior month).
  • Turmoil on banks and markets have increased worries but expectations index remained in positive territory after a rebuilding process past quarters.

Switzerland: M3 (Feb.): 0.1% y/y (prior: -0.1% revised from 0%)

  • On a yearly basis, monetary aggregates have contracted more: M2 down by 5.5% y/y after -4.7% y/y the prior month and M1 down by 6.7% y/y after -5.1% y/y.

Switzerland: Trade balance (Feb.): 3.31 Bn CHF (prior: 4.85Bn)

  • Real exports were down by 2.7% m/m after 2.6% m/m the prior month; real imports were down by 0.5% m/m after 0.1% m/m past month.

Poland: Retail sales (Feb.): -3.6% m/m vs 0.8% expected (prior: -23.2% revised from -23.1%)

  • Sales have contracted further over the month; auto sales were up (8.6% m/m) but sales in other sectors were negative, driven by falling sales for clothes and household goods.


Monday 20 March
German PPI have benefited from lower energy prices

Germany: PPI (Feb.): -0.3% m/m vs -1.4% expected (prior: -1.2% revised from -1%)

  • Energy prices were down by 1.4% m/m after -5.6% m/m the prior month, while prices of capital goods were up by 0.4% m/m (1.7% m/m the prior month) and non-durable consumer goods prices up by 0.9% m/m after 1.8% m/m).
  • Decline in energy prices have driven total PPI on lower stance, from 17.6% y/y the prior month to 15.8% y/y.

Poland: PPI (Feb.): -0.4%m/m vs 0.4% expected (prior: 2.1% revised from 0.8%)

  • Prices were highly volatile on a monthly basis, particularly after upwards revisions to last month data.
  • Over the month, prices of manufacturing goods and electricity-gas prices have declined.
  • Yearly trend has declined from 20.1% y/y the prior month to 18.4% y/y.

Poland: Industrial production (Feb.): 0.4% m/m vs 0.9% expected (prior: -3.2% revised from -2.5%)

  • Data remained highly volatile globally and by sector over past months.
  • Manufacturing production was up by 0.8% m/m after -4.6% m/m the prior month; activity in electricity-gas sector was heavily down over the month.
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Insight 23.02.2023

Adapting Advisory portfolios to the improved fixed income outlook

As a decade of yield repression comes to an end, building a fixed income portfolio with an acceptable yield has become an easier task. Given a deteriorating economic background and hawkish policymakers, we believe in harvesting the attractive yields offered by short-term quality bonds, which currently have the best risk-return profile.