Last week, positive economic data brought back some confidence. The global purchasing managers’ index, one of the most important survey-based economic reports, rose for the third time in a row. On the other hand, the latest inflation reports dampen hopes of a rapid decline in inflation without additional key rate hikes.
THIS AUTHOR'S POSTS
Risk inflation persistence
Inflation, which remains too high, continues to be the dominant macroeconomic issue. Hopes that inflation will fall as quickly as it has risen have been dampened, as Chief Economist Gerhard Winzer explains in his market commentary.
Calibration
Central banks and markets are in a calibration phase. The question is how many key rate hikes are needed to be able to confidently expect inflation to fall in the direction of 2%. Particular attention is therefore once again being paid to the US inflation data, which will be published today, Tuesday.
Party Crashers
Improved growth prospects for China and Europe and hopes of a sustained decline in inflation have supported the markets since the beginning of the year. However, sharp central bank rhetoric and weak growth indicators in the USA could prove to be spoilers.
Tug of war
At present, indicators on inflation and economic activity are competing to determine which of the two categories is more important for the financial market. Read more in the current market commentary by Chief Economist Gerhard Winzer.
Ten topics for 2023
The previous year was marked by unexpectedly high inflation and rapid key interest rate hikes – but what will the new year bring?
In his article, Chief Economist Gerhard Winzer presents ten topics that could be particularly relevant for the financial markets in 2023.
High uncertainty reduces potential for asset price increases
The environment for the financial markets remains highly uncertain. The further development of inflation and economic growth is not sufficiently foreseeable. This points to continued high fluctuations in asset prices.
Ceteris Paribus
The indications that the inflation peak will be exceeded are growing. If the relationship between inflation surprises (upside) and asset prices (downside) were to hold, that would be, all other things being equal, good news for the financial market.
Transition Phase
So far this year, high inflation rates have been the driving factor on the financial markets. This could now change, as Chief Economist Gerhard Winzer writes. Disappointingly weak indicators of economic activity could now increasingly come into focus.
One month is not yet a trend
The rise in inflation in the USA was recently lower than expected, which led to a significantly brighter mood on the markets. However, a favourable inflation report is not yet a trend, as Chief Economist Gerhard Winzer emphasises.