Macroeconomic & Geopolitical

Year of the Tiger, Thrill of the Central Bank Fight

February 2022 – 3 min read

The upward surprise in euro area CPI in January, and ensuing higher inflation concerns by the ECB, led markets to boost rate hike expectations, while euro area yields surged and the euro appreciated in response.

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Arrows indicate consensus forecast compared to the previous period. Local dates of release.

U.S.
  • The consumer price index is expected to remain elevated in January amid protracted supply constraints.
  • We continue to watch Q4 corporate earnings to gauge how companies are faring in the face of rising input prices. So far, earnings are on track to grow 24.5% Y/Y, with the beat over initial expectations rising from 2% last week to about 5% this week.
Europe
  • U.K. Q4 GDP data, as well as industrial and manufacturing output for December, will show how the economy reacted to new Omicron restrictions.
Asia Pacific
  • Watch China credit growth for January, as it may have accelerated on the back of policy easing. More stimulus is likely necessary given headwinds from Omicron and a slowdown in property, and, more recently, manufacturing.
  • Japan PPI is expected to remain elevated, which risks squeezing corporate profits amid limited pass-through to CPI, so far.

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Kathryn Asher

Associate Director, Economist

Agnès Belaisch

Managing Director, Chief European Strategist

Matteo Cominetta

Director, Economist

Bonnie David

Assistant

Christian Floro

Associate Director

Anna Hanley-Walsh

Analyst

Christopher Smart, PhD, CFA

Chief Global Strategist & Head of the Barings Investment Institute

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