Fitch revise corporate revenues expectations lower – slower growth, mild US, EU recessions

Fitch Ratings not joining in the post-NFP optimism.

Fitch forecasts global GDP growth will slow to 1.4% in 2023

  • from a projected 2.6% for 2022.
  • eurozone and UK are likely to have entered recessions in late 2022, with the US following in mid-2023 “as high inflation prompts more interest rate hikes, consumer spending slows and unemployment rises.”

Markets not paying any attention to Fitch …

Monday Asia is seeing oil up more than USD1 for CL and Brent.

APAC stocks rising:

  • Hong Kong’s Hang Seng index +1.4% at the open
  • Shanghai Composite +0.6%, Shenzhen Component +0.43%
  • South Korea Kospi +2%
  • (Jaspan is closed fora holiday)

Across major FX the USD is down almost across the board:

  • EUR, GBP, yen, AUD, NZD all higher

Gold, silver both higher.

Citi CEO says Federal Reserve to hike to just under 5.5% by May, recession likely in H2 23

Citigroup CEO Jane Fraser in a written interview with Japan’s Nikkei media (may be gated). It was conducted in December but the Nikkei only just published it over the weekend.

Main points:

  • overall U.S. inflation has peaked, services inflation continues to be painfully persistent.”
  • “We see the Fed increasing its terminal rate to just under 5.5% by next May and holding rates at that level through the end of next year”
  • “I think a recession is likely to happen in the U.S. sometime in the second half of 2023”

Highlights include US & China CPI, and US earnings season

Week Ahead January 9-14th:

MON: Swiss Unemployment (Dec), German Industrial Output (Nov), EZ Sentix (Jan), Unemployment (Nov), Chinese Exports/Imports (Dec)
TUE: EIA STEO; Norwegian CPI (Dec), US NFIB (Dec), Chinese M2 & New Yuan Loans (Dec)
WED: Australian CPI (Nov)
THU: Australian Trade Balance (Nov), US CPI (Dec), IJC (w/e 2nd Jan)
FRI: ECB TLTRO Repayment Amount Publication; UK GDP (Nov), Swedish CPIF (Dec), EZ Trade Balance (Nov), Industrial Production (Nov), US University of Michigan Prelim. (Jan), German Wholesale Price Index (Dec), Canadian Housing Starts (Dec)

NotePreviews are listed in day-order

Chinese CPI (Thu): There are currently no expectations for the December Chinese inflation data release. To recap the prior report, CPI Y/Y rose 1.6% in November from the 2.1% pace in October, with prices of food printing at 3.7%, 3.3ppts lower than October, according to Global Times (GT). A bulk of the consumer inflation was fuelled by food prices in the month – with prices of pork soaring 34.4%. “According to a research report issued by the China International Capital Corporation (CICC), the tightened supply of live pigs has been ameliorated in November amid Chinese authorities’ scaled-up policy adjustment”, reported GT. China set a consumer inflation target of around 3% for 2022. PPI meanwhile fell 1.3% in November, largely due to base effects. Using the latest Chinese Caixin PMI data as a proxy for December, the release suggests “Input costs faced by Chinese firms rose at the slowest rate since September and only marginally. Prices charged were meanwhile stable, as discounting at manufacturers was offset by price hikes at services firms.” From a broader policy perspective, Caixin’s Chief Economist warned – “Under pressure from shrinking demand, weakening expectations and a supply shock, the annual Central Economic Work Conference stated that the foundation for an economic recovery is not solid. Policymakers have made it clear that priority must be given to the recovery and expansion of domestic consumption.”


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