United States: Light data week, soft landing?

Wells Fargo Research Team Wells Fargo

Summary

United States: Light Data Week, Soft Landing?

Beyond Chair Powell's interview on Tuesday, it was a light week for economic news. The U.S. trade deficit widened to $67.4 billion at the end of last year, revolving consumer credit increased at its slowest pace since 2021 in December and year-ahead consumer inflation expectations jumped to 4.2% in February.
Next week: NFIB (Tue), CPI (Wed), Retail Sales (Wed)

International: International Central Banks Deliver Another Round of Rate Hikes

This week saw another round of rate hikes from global central banks. The Reserve Bank of Australia (RBA) got the ball rolling with a 25 bps policy rate hike, to 3.35%. Given hawkish comments, we expect the RBA to follow up with 25 bps hikes in both March and April. Sweden's central bank hiked rates 50 bps and signaled a further increase in the spring, while adding it would also start selling bonds to shrink its balance sheet at a faster pace. Mexico's central bank surprised with a larger-than-forecast 50 bps policy rate hike to 11.00%, while the Reserve Bank of India also raised interest rates this week.
Next week: Japan GDP (Tue), U.K. CPI (Wed), Australia Employment (Thu)

Credit Market Insights: Worsening Credit Conditions: Good News for the Fed?

The latest Senior Loan Officer Opinion Survey (SLOOS) revealed widespread demand deterioration and tighter credit standards across all loan types in the last three months of 2022. The decline in credit conditions is emblematic of the broader effects of restrictive monetary policy starting to take hold.

Topic of the Week: Heading South: Sun Belt on the Rise

Recent blockbuster NBA trades are emblematic of broader migration trends occurring in the United States. Between 2021 and 2022, Census Bureau estimates indicate that nine of the top 10 states receiving the highest number of domestic migrants were within the Sun Belt.

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Wells Fargo Research Team

Wells Fargo

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.