Charts of the Day
The US credit impulse, which measures the rate of change in the flow of credit, is picking up again on both a six- and 12-month basis. That is normally thought to be a good thing for economic growth, as increased borrowing normally coincides with increased consumer and business spending – though the surge in early 2020 and later decline mainly reflected precautionary borrowing by businesses and the rise in government deficits, as the chart below shows. More recently, household and commercial loans have shown tentative signs that they are picking up after a period of deleveraging.
Macro
In Japan, export growth decreased to 16.5% YoY in December, while import growth was a much stronger 38.9% YoY – a very unusual sized gap.
The most recent OECD data show a 28% YoY rise in house prices in New Zealand, almost making the sharp rises elsewhere seem modest – but can this level of prices be sustained as borrowing costs rise?
Markets
Of the S&P 500 sectors, yesterday communication services performed worst, with a fall of 1.7%, and energy best, with a rise of 1.3%.
The rise in the energy sector was despite a modest decline in oil prices.
Gold prices continue to largely shrug off the rise in real yields.
Gold may be benefitting from signs of stress elsewhere, with corporate bond yields rising.
The eurozone 5-year interest rate swap as traders begin to anticipate some tightening from the ECB – but look how low long-term interest rates still are. So traders are betting the ECB will act relatively aggressively now but this means inflation will be low in the long run.
The UK 12-month overnight index swap is now up to 1.25% – so traders also think the BoE will tighten policy to a level above where it was before Covid hit.
Like what you see? Please forward this email to your friends and colleagues and tell them to sign up at www.macromarketsdaily.com, or use the button below to share it on social media. They can also follow us https://twitter.com/macro_daily
