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, Head of Macroeconomic Research

Bonnie David

Assistant

Christian Floro

Associate Director

Christopher Smart, PhD, CFA

Chief Global Strategist & Head of the Barings Investment Institute

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