Chart of the Day
The OECD leading indicators released for January are accelerating in 67% of countries covered, marking a major synchronized cyclical upswing across the global economy. The improvement might be related to the fading of some supply issues which had held back production in many countries. No matter the cause, this should be some relief to investors who are concerned about rising interest rates. Higher rates are obviously bad news for some areas of the market, but the cyclical upswing suggests earnings growth will remain buoyant.
Macro
In the US, mortgage rates are now back near pre-covid levels – will mortgage applications weaken as a result?
German export growth rose to 11.8% YoY in December, due to a 0.9% MoM rise. Export orders suggest growth will remain strong.
Markets
The weekly EIA report showed crude inventories fell by 3.6 mn barrels last week and are now 2.8% lower than their average at this time of year over 2017-19.
The weekly EIA report showed that US crude production rose by 0.1 mn barrels last week, but is still more than 1 million barrels per day lower than in 2020.
Active rigs are only rising slowly despite higher prices
It was a strong day for the agricultural commodities yesterday. Soy beans rose by 1.6% and corn rose by 2.3%. Soy beans are now up by 16.0% in the past month, and corn up by 5.9%.
The Nasdaq rose to its strongest since prices tumbled at the start of the year, outpacing the Russell and S&P 500.
With the ECB getting more hawkish, very long-run inflation expectations in the eurozone have fallen below 2%.
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