Macroeconomic & Geopolitical

U.S. Inflation & U.K. Consumer Test Positive

February 2020 – 3 min read
The U.K. rebounds on retail sales and the U.S. PCE deflater, the Fed's preferred inflation indicator, is expected to rise. This winter's warmer weather has also brought more upside to housing and construction but has begun weighing on utilities.


Arrows indicate consensus forecast compared to the previous period.


  • The PCE deflator is expected to edge higher in January, following the upward surprises of the CPI and PPI. However, even if the PCE deflator, the Fed’s preferred measure, inches closer to 2%, the Fed likely won’t raise rates.
  • On the U.S. policy front, President Donald Trump is traveling to India for a two-day trip to discuss a trade deal between the two countries. Meanwhile, we watch for the results of the South Carolina Democratic primary election on Saturday to see how candidates fare in a notably more diverse state.  


  • German IFO business climate index will indicate how Covid-19 is affecting business confidence in the export-dependent country.
  • France GDP will likely come in on the weaker side, as strikes surrounding pension reform and reduced inventories may weigh on the headline. However, growth should be stronger in the first quarter.

Asia Pacific

  • China’s official manufacturing PMI should give some indication to the degree in which Covid-19 is weighing on manufacturing as factories remain shuttered.

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Christopher Smart, PhD, CFA

Chief Global Strategist & Head of the Barings Investment Institute

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