Economic Growth - The U.S. economic growth momentum weakened slightly in March, with the composite PMI at 51.4, below the expected 51.9[2] - The GDPNow indicator shows a decline in Q1 GDP growth to 2.0%, down by 0.3 percentage points[2] - Consumer confidence dropped significantly in March, with the Redbook retail index showing a year-on-year decline of 6.5%[2] Financial Conditions - Financial conditions tightened significantly in March, with Goldman Sachs' financial conditions index tightening by 75 basis points[3] - The S&P 500 index fell by 7.4% to 6368.9, while the credit spread widened by 4 basis points to 1.15%[3] - The 2-year and 10-year U.S. Treasury yields increased by 54 basis points and 49 basis points, reaching 3.91% and 4.43% respectively[3] Inflation - February's CPI showed a mild increase of 0.3%, while core CPI decreased to 0.2%[4] - High oil prices are expected to elevate short-term inflation expectations, with 2-year and 10-year inflation expectations rising by 50 basis points and 3 basis points to 3.28% and 2.32% respectively[4] Labor Market - February's non-farm payrolls showed a decline of 92,000 jobs, significantly below the expected increase of 55,000[5] - The unemployment rate rose by 0.1 percentage points to 4.4%, with the labor force participation rate decreasing to 62.0%[5] - Job vacancies indicated a slowdown in labor demand, as evidenced by a decrease in the Indeed job postings index[5] Risks - Geopolitical risks in the Middle East are rising, which could further impact economic conditions and the labor market[6]

Economic Data and Events - In the past week, US housing prices remained flat, while consumer confidence and inflation exceeded expectations. The S&P/CS 20-City Composite Home Price Index showed a year-on-year increase of 1.4%, aligning with expectations and previous values. The Conference Board Consumer Confidence Index for February was reported at 91.2, significantly above the expected 87 and previous value of 89. The January PPI year-on-year was 2.9%, better than the expected 2.6% but lower than the previous 3% [11][12]. - In the Eurozone, economic sentiment was below expectations, with the February Economic Sentiment Index at 98.3, lower than the expected 99.8 and previous value of 99.3 [11]. - Japan's retail sales and inflation also exceeded expectations, with January retail sales up 1.8% year-on-year, compared to an expected 0.1% and a previous value of -0.9%. The Tokyo Core CPI for February was reported at 1.8%, above the expected 1.7% and previous value of 2% [11]. Weekly Economic Activity Index - The US Economic Activity Index (WEI) showed an upward trend, with a value of 2.65% for the week ending February 21, compared to 2.89% the previous week. The four-week moving average was 2.6% [15]. - The German Economic Activity Index (WAI) remained stable at 0.05% for the week ending February 22, with a four-week moving average of 0.05% [15]. Demand - The US Redbook Commercial Retail Sales growth rate showed a marginal decline, with a year-on-year increase of 6.7% for the week ending February 20, down from 7.2% the previous week. The four-week moving average was 6.78% [19]. - In the real estate sector, US mortgage rates decreased, with the 30-year mortgage rate at 5.98% as of February 26, down from 6.01% the previous week. Mortgage application numbers showed a slight increase, with the MBA Market Composite Index at 340.2, reflecting a 0.4% week-on-week change [21]. Employment - Initial jobless claims and continuing claims for unemployment benefits were better than expected. Initial claims rose to 212,000 for the week ending February 26, compared to an expected 215,000 and a previous value of 208,000. Continuing claims decreased from 1.864 million to 1.833 million, against an expected 1.858 million [26]. - The number of job vacancies remained stable, with the Indeed Job Vacancy Index at 104.47 as of February 20, reflecting a week-on-week increase of 0.45% [30]. Prices - Commodity prices rebounded, with the RJ/CRB Commodity Price Index showing a week-on-week increase of 0.5% as of February 27. US gasoline prices continued to rise, reported at $2.80 per gallon for the week ending February 23, reflecting a week-on-week increase of approximately 0.2% [33]. Financial Conditions - Financial conditions in the US and Europe showed marginal deterioration. The Bloomberg Financial Conditions Index for the US was reported at 0.504 on February 27, down from 0.61 the previous day and 0.648 the week before. The Eurozone index also declined to 1.528 from 1.594 the previous week [37]. - Offshore dollar liquidity showed marginal deterioration, with the euro to dollar three-month swap basis significantly declining to 0.38 basis points from 2.38 basis points the previous week [39]. - The spread-to-worst for high-yield dollar bonds surged to 284.0 basis points on February 27, widening from 271.8 basis points the previous day and 262.1 basis points the week before [40]. - The US-Japan yield spread narrowed to 185.2 basis points as of February 26, while the US-Europe spread remained stable at 127.3 basis points. The Italian-German yield spread continued to narrow, reported at 58.9 basis points [45]. Fiscal Data - As of February 26, cumulative federal spending in the US was approximately $1.3 trillion, reflecting a year-on-year growth rate of 5.8%. This compares to $1.2 trillion in the same period last year, which had a growth rate of 8.1% [50].

Key Points - The article discusses the recent economic data from the US and Japan, highlighting significant trends in housing sales, employment, and inflation [2][10] - It emphasizes the mixed signals in the US economy, with some indicators showing improvement while others indicate a slowdown [2][4] Group 1: Important Data Review - US January existing home sales fell significantly, with an annualized rate of 3.91 million units, down 8.4% month-over-month, against an expectation of a 4.15 million unit decline [12] - The US non-farm payrolls for January added 130,000 jobs, exceeding expectations of 65,000, with average hourly earnings increasing by 3.7% year-over-year [12] - Japan's Prime Minister announced plans to implement tax cuts, including a proposal to suspend the consumption tax on food and beverages for two years, potentially reducing tax revenue by approximately 5 trillion yen annually [13] Group 2: Economic Activity Index - The US Weekly Economic Index (WEI) rose to 2.70% for the week ending February 7, up from 2.21% the previous week, indicating a rebound in economic activity [15] - Germany's Weekly Activity Index (WAI) also increased to 0.10% for the week ending February 8, compared to 0.02% the prior week [15] Group 3: Demand - The US Redbook retail sales growth rate decreased to 6.5% year-over-year for the week ending February 6, down from 6.7% the previous week [18] - Mortgage rates in the US fell slightly, with the 30-year fixed mortgage rate at 6.09%, down from 6.11% the previous week [23] Group 4: Employment - The ADP weekly employment change showed an increase, with 26,000 jobs added over the four weeks ending January 24, up from 20,000 the previous week [28] - Initial jobless claims decreased to 227,000 for the week ending February 7, down from 232,000 the previous week [31] - The number of job vacancies fell, with the Indeed job vacancy index averaging 103.5, down from 104.2 in December [36] Group 5: Prices - Commodity prices fell, with the RJ/CRB commodity price index at 306.54, down 1.0% week-over-week and 4.2% over the past two weeks [6] - US gasoline prices increased to $2.77 per gallon, up 0.8% from the previous week [42] Group 6: Financial Conditions - Financial conditions in the US and Eurozone tightened, with the Bloomberg Financial Conditions Index for the US at 0.537, down from 0.755 the previous week [46] - Offshore dollar liquidity worsened, with the three-month swap basis for the yen against the dollar at -20.1909 basis points, down from -17.9347 basis points the previous week [49] - The 10-year government bond yield spreads narrowed between the US and Eurozone, as well as between the US and Japan [52]

Economic Data and Events - The US manufacturing and services PMI, as well as consumer confidence, exceeded expectations, while employment data was significantly weaker than anticipated [2][14] - In the Eurozone, January manufacturing PMI showed a greater rebound than the initial value, but services PMI and retail sales fell short of expectations; inflation met expectations and remained stable compared to the previous value [2][14] - Japan's manufacturing and services PMI both improved in January [2][14] Upcoming Economic Data and Events - Key focus on the US non-farm payroll report for January to be released on February 11 and the US CPI data for January to be released on February 13 [3][16] Weekly Economic Activity Index - The US economic activity index remained stable, with the WEI index at 2.13% for the week ending January 31, down from 2.49% the previous week [4][18] - Germany's economic activity index returned to positive territory, with the WAI index at 0.1% for the week ending February 1, compared to -0.01% the previous week [5][18] Demand - US Redbook commercial retail year-on-year growth rate showed fluctuations, with a reading of 6.7% for the week ending January 30, down from 7.1% the previous week [6][21] - The US mortgage rate stabilized, with the 30-year mortgage rate at 6.11% on February 5, slightly up from 6.10% the previous week; mortgage applications fell, with the MBA market composite index at 330.8, down 8.9% week-on-week [6][24] Employment - Initial jobless claims rose to 231,000 for the week ending January 31, up from 209,000 the previous week; continuing claims increased from 1.819 million to 1.844 million for the week ending January 24 [7][27] - The number of job vacancies remained stable, with the Indeed job vacancy index at 103.9 as of January 30, slightly lower than the December average of 104.2 [8][29] Prices - Commodity prices experienced a significant pullback, with the RJ/CRB commodity price index down 3.3% week-on-week as of February 6 [9][34] - US gasoline prices stabilized at $2.75 per gallon for the week ending February 2, showing no change from the previous week [9][36] Financial Conditions - Financial conditions in the US and Europe showed signs of recovery, with the Bloomberg financial conditions index for the US at 0.755 on February 6, up from 0.539 the previous day [10][39] - Offshore dollar liquidity remained stable, with narrow fluctuations in swap basis [11][41] - High-yield dollar bond spreads widened but showed signs of recent recovery, with the spread-to-worst for JPMorgan's global BB-B rated dollar bonds at 256.3 basis points [11][43] - The yield spread between US and Japanese bonds narrowed, while the spread between Italian and German bonds widened [11][46] Fiscal Data - As of February 5, cumulative federal funding expenditures in the US increased by 3.8% year-on-year, totaling approximately $784.5 billion [12][49][52]

Economic Data and Events - US manufacturing and services PMI, along with consumer confidence, exceeded expectations, while employment data was significantly weaker than anticipated[2] - Eurozone's January manufacturing PMI showed a larger-than-expected rebound, but services PMI and retail sales fell short of expectations[2] - Japan's January manufacturing and services PMI both improved[2] Economic Activity Index - The US WEI index stood at 2.13% for the week ending January 31, with a four-week moving average of 2.32%[4] - Germany's WAI index returned to positive territory at 0.1%, with a four-week moving average of 0%[4] Demand Indicators - US Redbook commercial retail year-on-year growth was 6.7%, with a four-week moving average of 6.25%[5] - The 30-year mortgage rate in the US stabilized at 6.11%, with mortgage applications declining by 8.9% week-on-week[5] Employment Data - Initial jobless claims rose to 231,000, up from 209,000 the previous week[6] - The INDEED job vacancy index was 103.9, slightly down by 0.5% from the previous week[7] Price Trends - The RJ/CRB commodity price index decreased by 3.3% week-on-week, while US gasoline prices remained stable at $2.75 per gallon[8] Financial Conditions - The Bloomberg Financial Conditions Index for the US was 0.755, recovering from 0.539 the previous day[9] - The Eurozone's Financial Conditions Index increased to 1.714 from 1.533 the previous week[9] Fiscal Data - As of February 5, US federal spending was approximately $784.5 billion, with a year-on-year growth rate of 3.8%[10]

Group 1 - Kevin Warsh's nomination as the next Federal Reserve Chair has intensified discussions around future monetary policy paths, emphasizing a structural difference in his approach compared to traditional "hawkish" views [1] - Warsh advocates for reducing the Fed's balance sheet and decreasing direct intervention in financial markets while simultaneously promoting policies that lower overall financing costs, reshaping market perceptions of financial conditions and asset pricing [1][2] - The combination of Warsh's approach with Treasury Secretary Becerra's emphasis on predictable fiscal policy creates conditions for informal coordination between monetary and fiscal policies, potentially improving market perceptions of liquidity and supply [2] Group 2 - Warsh's inclination towards lowering interest rates may provide support for the front end of the yield curve, while stable expectations for Treasury supply could lead to reduced volatility in long-term rates [3] - The shift in responsibility from the Fed to fiscal and regulatory systems may allow for adjustments in the strict constraints on bank reserves and high-quality liquid assets, enhancing market depth and supporting Treasury prices [3] - The precious metals market is experiencing significant price volatility, with gold and silver showing increased instability reminiscent of the 2008 financial crisis, indicating a new phase of price fluctuations [4] Group 3 - Recent policy uncertainties have marginally eased, with the extension of the African trade tax exemption until the end of 2026 providing temporary certainty for related countries and U.S. businesses, stabilizing market expectations for global trade [5] - Despite short-term market volatility, the core support for the gold market remains intact, driven by ongoing demand for hedging in global asset allocation and the accumulation of monetary policy uncertainties [5] - The extreme fluctuations in gold prices are viewed as part of a structural adjustment rather than a trend reversal, with market focus shifting from short-term movements to a longer-term risk framework [5]

Economic Growth - In January, the US manufacturing PMI rose by 0.1 percentage points to 51.9, while the services PMI remained flat at 52.5, both slightly below expectations[2] - The Q3 GDP growth rate was revised up by 0.1 percentage points to 4.4%, exceeding the expected 4.3%, primarily due to an upward revision in intellectual property and a narrowing drag from net exports[2] - Real personal spending in November remained flat at 0.3%, with the Redbook retail index showing high year-on-year growth in December and January[2] Financial Conditions - Goldman Sachs' financial conditions index eased by 10 basis points in January, driven by a weaker dollar, narrowing credit spreads, and rising US stock prices[3] - The S&P 500 index increased by 1.4% in January, while corporate credit spreads narrowed by 5 basis points to 0.96%[3] - The US dollar index fell by 1.2% to 97.1 as of January 30[3] Inflation - The December core CPI increased by 0.2%, which was below expectations, with a marginal rise of 0.16 percentage points from November[4] - Inflation expectations rose in January, with 2-year and 10-year TIPS inflation expectations increasing by 54 basis points and 9 basis points to 2.84% and 2.34%, respectively[4] Labor Market - December's non-farm payrolls added only 50,000 jobs, below the expected 70,000, with the unemployment rate dropping by 0.1 percentage points to 4.4%[5] - The labor force participation rate decreased by 0.1% to 62.4%, while average hourly earnings rose by 0.3% month-on-month[5] - Job openings showed signs of improvement, with a notable decrease in WARN notices indicating layoffs in December[5] Risks - There are concerns regarding the speed of weakening in the US labor market and the potential for liquidity tightening to be less than expected[6]

Core Viewpoint - The article highlights the current economic indicators in the US, Eurozone, and Japan, noting low unemployment claims in the US, rising commodity prices, and upcoming key economic data releases [2][4][10]. Group 1: Important Economic Data - For the week of January 26-30, US durable goods orders for November exceeded expectations, and December PPI also surpassed forecasts [4][17]. - Eurozone's Q4 GDP and December unemployment rate were better than expected [4][18]. - Japan's December industrial output was above expectations, while January Tokyo CPI fell short [4][20]. Group 2: Weekly Economic Activity Index - The US WEI index rose to 2.49% for the week of January 24, up from 2.16% the previous week [5][22]. - The German WAI index remained low, at 0.04%, showing slight improvement from the previous week [5][22]. Group 3: Demand - The US Redbook commercial retail sales year-on-year growth rate increased to 7.1%, up from 5.5% the previous week [6][26]. - The 30-year mortgage rate in the US was stable at 6.1%, with a slight decline in mortgage applications [6][29]. Group 4: Employment - Initial jobless claims in the US were slightly below expectations at 209,000, while continuing claims fell to 1.827 million, better than anticipated [7][31][32]. - Job vacancy numbers showed stability, with the Indeed job vacancy index at 104.4, slightly lower than December's average [31][35]. Group 5: Prices - Commodity prices saw a significant increase but experienced a notable pullback on Friday. The RJ/CRB commodity price index rose by 2.5% week-on-week [8][36]. - US gasoline prices continued to rebound, reaching $2.75 per gallon, up 1.7% from the previous week [8][36]. Group 6: Financial Conditions - Financial conditions in the US and Eurozone tightened slightly, with the Bloomberg financial conditions index for the US at 0.775, down from 0.812 [9][38]. - Offshore dollar liquidity remained stable, with minor changes in swap basis for both yen and euro against the dollar [9][40]. Group 7: Fiscal - As of January 29, US federal funds cumulative expenditure was approximately $532.4 billion, with a year-on-year growth rate of 2.9% [10][49][50].

Key Points - The article discusses recent economic data from the US, Japan, and the Eurozone, highlighting mixed signals in employment, inflation, and consumer confidence [2][5][15] - It emphasizes the importance of monitoring economic indicators such as the ADP employment numbers, JOLTs job openings, and ISM manufacturing and services PMIs to gauge economic health [5][15] - The article notes that while US consumer confidence has reached a four-month high, employment figures have shown signs of weakness, indicating potential economic challenges ahead [5][15] Group 1: Important Data Review - US December ADP employment numbers were below expectations, with a growth of 41,000 jobs compared to an expected 50,000 [15] - The US trade deficit narrowed to $29.4 billion in October, significantly lower than the expected $58.5 billion [15] - The ISM services PMI rose to 54.4 in December, exceeding expectations, while the manufacturing PMI fell to 47.9, indicating continued contraction [15] Group 2: Economic Activity Index - The US WEI index fell to 2.13% for the week ending January 3, down from 2.49% the previous week, indicating a decline in economic activity [19] - The German WAI index increased to 0.07% for the week ending January 4, up from 0.05% the previous week, suggesting a slight improvement in economic conditions [19] Group 3: Demand - The US Redbook retail sales year-on-year growth rate decreased to 7.1% for the week ending January 3, down from 7.6% the previous week [23] - The US mortgage rates increased slightly to 6.16% for a 30-year fixed mortgage, while mortgage applications rose, with the MBA market composite index reaching 270.8, a 0.3% increase from the previous week [26][27] Group 4: Employment - The ADP weekly employment numbers showed a decline, with a four-week cumulative increase of 46,000 jobs, down from 70,000 the previous week [32] - Initial jobless claims rose to 208,000 for the week ending January 3, up from 200,000 the previous week [33] - The INDEED job vacancy index increased to a weekly average of 104.8, indicating a rise in job openings [36] Group 5: Prices - The RJ/CRB commodity price index rose to 301.47, reflecting a 1.2% increase from the previous week [42] - US gasoline retail prices fell to $2.68 per gallon, a decrease of 0.3% from the previous week [42] Group 6: Financial Conditions - Financial conditions in the US and Eurozone remain loose, with the Bloomberg financial conditions index for the US rising to 0.863 from 0.795 the previous week [47] - Offshore dollar liquidity showed improvement for the yen against the dollar, while the euro against the dollar deteriorated [49] - The 10-year US-EU government bond yield spread widened to 126.8 basis points, up from 121.5 basis points the previous week [52]

Core Viewpoint - The article highlights that the U.S. employment indicators are stabilizing at low levels, with various metrics showing signs of steadiness in the labor market [2]. Group 1: Recent Economic Data and Events - Multiple economic data points from the U.S. exceeded expectations, including Q3 GDP growth rate, personal consumption, industrial output growth for November, and the Richmond Fed manufacturing index for December. However, consumer confidence and durable goods orders growth fell short of expectations [4][18]. - In the Eurozone, Spain's November PPI decreased compared to the previous value, while Italy's November PPI increased [5][18]. - Japan's inflation and industrial output were below expectations [5][18]. Group 2: Upcoming Economic Data and Events - Key upcoming economic indicators to watch include the Eurozone manufacturing PMI for December, scheduled for release on January 2, and the S&P Global U.S. manufacturing PMI for December, also set for January 2 [6][20]. Group 3: Weekly Economic Activity Index - The U.S. economic activity index showed a slight rebound, with the WEI index at 2.32% for the week ending December 20, compared to 2.31% the previous week [7][22]. - Germany's economic activity index also trended upward, reaching 0.14% for the week ending December 21 [7][22]. Group 4: Demand - U.S. retail sales growth, as measured by the Redbook index, increased year-on-year to 7.2% for the week ending December 19, up from 6.2% the previous week [8][28]. - Mortgage rates in the U.S. remained stable, with a slight decline in mortgage applications [9][30]. Group 5: Employment - The ADP weekly employment figures showed stabilization at low levels, with approximately 46,000 new jobs added in the four weeks ending December 9, down from 70,000 the previous week [9][35]. - Initial jobless claims fell to 214,000 for the week ending December 20, better than expected, while continuing claims rose to 1.923 million, exceeding expectations [10][38]. - The number of job vacancies remained stable, with the Indeed job vacancy index at 104.66 as of December 12, a slight decrease of 0.2% from the previous week [11][41]. Group 6: Prices - Commodity prices rebounded, with the RJ/CRB commodity price index increasing by 1.8% week-on-week as of December 26, following a decline of 1.1% the previous week [12][46]. - U.S. gasoline prices continued to decline, averaging $2.72 per gallon for the week ending December 22, down 1.9% from the previous week [12][46]. Group 7: Financial Conditions - Financial conditions in the Eurozone improved, while U.S. financial conditions remained stable at high levels [13][49]. - Offshore dollar liquidity showed slight easing, with the three-month swap basis for the yen against the dollar at -24.1 pips, improving from -25.8 pips the previous week [13][51]. - The spread-to-worst for high-yield dollar corporate bonds remained stable at 265.3 basis points as of December 26 [13][54]. - U.S. and Japanese long-term government bond spreads remained stable, with the 10-year U.S.-Japan bond spread at 214.1 basis points [13][57]. Group 8: Fiscal - As of December 24, cumulative federal spending in the U.S. for the year was approximately $7.66 trillion, reflecting a year-on-year growth of 5.9% [15][62].