Weekly economic and financial commentary

Wells Fargo Research Team Wells Fargo

United States: First looks point to february activity holding firm

Data this week did little to alter the picture that, to the extent the underlying trend in the economy is softening, it is not weakening nearly enough to put a quick end to inflation. Manufacturing activity is contracting only gradually, while the service sector continues to expand at a solid clip according to the February ISM releases.
Next week: Consumer Credit (Tue), JOLTS (Wed), Employment (Fri)

International: Major economies see slower growth, slowing but still high inflation

With China being a notable exception, this week's news largely consisted of slower growth late in 2022 for many of the major developed economies. Looking at Q4 GDP, Australia's economy grew by less than expected, GDP was flat for the quarter in both Canada and Switzerland, and Sweden's economy contracted in the final quarter of last year. Eurozone headline inflation eased only slightly, while core inflation firmed to the fastest pace on record.
Next week: Reserve Bank of Australia (Tue), Bank of Canada (Wed), Mexico CPI (Thu)

Interest Rate Watch: Growing interest in credit card debt

The cost of financing credit card debt has surged with the average interest rate reaching the highest in data going back to the mid-1990s. The share of credit card balances transitioning into early delinquency is rising, and all else equal, rising debt and rising financing costs for that debt could be a negative factor for consumer spending later this year.

Credit Market Insights: Student loan forgiveness arrives at the supreme court

On Tuesday, the Supreme Court heard opening arguments for two cases involving the Biden administration’s proposed student loan relief program. Last summer, we wrote a report on the potential economic impact of student debt cancellation, but how has the situation evolved in the six months since?

Topic of the Week: Global recession risks are receding

We have upgraded our China forecast following strong sentiment data in February. We now expect Chinese GDP to expand 5.5% in 2023, up from our previous forecast of 5.2%. China's economy has experienced a rebound following the end of Zero-COVID policies, increasing the likelihood that the global economy can skirt a recession this year.

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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.