Macroeconomic & Geopolitical

Pressures Continue to Build for Fed Hikes

February 2022 – 3 min read

U.S. CPI pushed the 10-year U.S. Treasury yield to 2% for the first time since the onset of COVID, and U.S. rate hike expectations increased, with markets pricing in 50% odds of a 50bps hike in March. Meanwhile, European inflation expectations are also edging higher.

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

U.S.
  • We will watch January retail sales data to analyze Omicron’s impact on consumer spending.
  • Housing data next week is expected to show a solid market that remains strong amid elevated demand and limited inventories.
Europe
  • January U.K. inflation is expected to rise further as price pressures come not only from energy but also the cost of food, household goods, and clothing.
  • The euro area Q4 GDP estimate might show the slowest growth in three quarters following Omicron’s spread across Europe.
Asia Pacific
  • China CPI is expected to moderate as food prices fall. Meanwhile, PPI is likely to remain elevated on firm industrial commodity prices, but expect this to fade in coming months.
  • Japan 4Q21 GDP could show an upturn amid an improvement in cases during the quarter, which likely helped boost private consumption.

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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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