Daiwa Europe Morning Economic Comment Overview

Last Updated: Friday, January 28, 2022 6:47 AM | MT Newswires

In a note received by MT Newswires at about 3am ET, Daiwa noted:

- A better end to the week for Asian stocks, with market sentiment buoyed by Apple's earnings; Japan's Topix closed up 1.9% on the day to be down 2.6% on the week; but while several other markets in the region also fared well, stocks in China and Hong Kong were down again on real estate concerns to be respectively about 4.5% and 5.5% lower on the week.

- US equity futures were higher led by tech, but USTs weakened in Asian time with the curve a little steeper (2Y yields up about 2/5bps to 1.21% with 10Y yields up about 3bps to 1.83%); US dollar took another step up to strongest in trade-weighted terms since June 2020.

- Tokyo inflation eased at the start of the year as base effects from the government's travel subsidies fell out of the calculation and underlying inflation weakened; despite some signs of higher price pressures under the bonnet Japan's inflation environment remains vastly different to that in the other major economies.

- French GDP rose a respectable 0.7%Q/Q in Q4 to move further above the pre-pandemic level despite ongoing supply bottlenecks and the new wave of coronavirus; while Spanish growth was likely stronger than its large neighbour but Germany likely suffered a contraction in Q4.

- European Commission's survey to flag hit to services from the pandemic at the start of year but also improvement in manufacturing despite still elevated price pressures.

- US data is expected to show another solid month for income growth, but personal spending likely weakened against the backdrop of higher prices and reduced retail activity amid the emergence of Omicron.

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