Macro-News round-up:

US: the inflation data released yesterday was surprising showing December inflation up 3.4% vs. the expected 3.2%, when annualized core inflation was 3.9%. Hours later, Loretta Mester of the Cleveland Fed would say: “To me, March is too early for a rate cut. I think we need to see more evidence. Speculation, therefore, that a Fed rate cut is imminent is back in play.

Continuing Jobless Claims data came out better than expected, fueling the idea that the US economy does not urgently need the promised monetary stimulus.

The market reacted with a rally in the dollar, which calmed down after the close of the session. stock markets responded downwards, with the spot SP500 retreating from the 4800 point area.

UK: UK GDP grew by 0.3% in November, but output contracted by 0.2% in the three months to the end of November, exceeding the forecast decline of 0.1%. The ONS forecasts a second consecutive quarter of falling output, which could lead to a technical recession. The economy has only grown by 2.5% since 2019. Sterling weakened slightly against the US dollar after the data. Finance Minister Jeremy Hunt said inflation was weighing on growth, but tax cuts for businesses and workers would boost the country’s longer-term prospects. The Office for Budget Responsibility forecasts growth of 0.6% for 2023 and 0.7% for 2024.

China: the inflation results presented early this morning are worrying, but for a different reason, the global economy. in the case of China, the inflation rate is not only weak in China but there are fears of a growing deflation. The monthly inflation rate was 0.1% in December, the annualized rate -0.3%. On the other hand, industrial producer prices, PPI, contracted by -2.7%, anticipating even more deflationary pressure. The main fear is that these are symptoms of a slowdown in the world’s second largest economy.

The trade balance, however, showed some improvement, with exports slightly above expectations and imports declining. Nevertheless, exports are 4.6% lower than a year ago, driven by weakening global demand and plummeting prices.

Commodities: In an attempt to undermine the rebels’ ability to attack shipping in the Red Sea, the United States and the United Kingdom jointly launched air strikes against Houthi targets in Yemen. The Houthis declared that they would continue to pursue Israeli and Israel-bound ships.

As investors tried to determine the possibility of a wider crisis in the Middle East, Brent crude oil rose as much as 2.5 per cent to over $79 per barrel.

On the other hand, due to the threat from the Iranian-backed Houthis, the Chinese shipping corporation COSCO has stopped visiting Israeli ports, yet China buys 90% of Iranian crude oil, so it is hardly credible to think that the rebels would want to attack Chinese-flagged ships.