Ahead Today
G3: US PPI, US U. Michigan Inflation Expectations, US Housing Starts
Asia: Singapore 2024 Budget, Malaysia GDP, Malaysia Current Account
Market Highlights
US Treasury yields retreated as US retail sales declined more than expected in January. Retail sales fell by 0.8%mom from a downwardly revised 0.4%mom gain in December, with 9 out of 13 categories posting decreases led by building materials and autos. We note some but perhaps not all of the weakness could be weather related. Meanwhile, on the back of the recent higher than expected CPI, import prices were also firmer, raising some concerns about the path ahead for inflation. Markets will focus on the Producer Price Index estimate out today, which will give a clearer indication of PCE inflation for January, the key inflation measure the Fed focuses on. The consensus is tracking core PCE at around 0.3% currently, but this may change with the PPI release.
Overall, the S&P500 rose by 0.6%, and the Dollar fell by 0.4%. Markets are now pricing in a June cut, from having priced it out post the CPI print, while penciling in slightly under 100bps of cuts this year.
Regional FX
Asian FX markets traded mixed against the Dollar. China’s average daily consumer spending on Meituan online platforms jumped more than 155% from the same period in 2019, according to Shanghai Securities news. Meanwhile, hotel sales at major Chinese e-commerce platforms surged by more than 60% during the Chinese New Year holidays, indicating some possible consumption recovery this year. The Philippines central bank kept rates on hold at 6.50%, but cut its “risk-adjusted inflation forecast” to 3.9% from 4.2% previously. Overall, this is in line with our view that the macro environment for the Philippines looks much better in 2024, with lower inflation, and gradually improving growth. Looking ahead, Singapore will announce its 2024 Budget. Some cost of living measures could be announced in Budget 2024 to help households cope with higher GST.
