A Fed that did not lean against easing financial conditions and an ECB perceived as dovish triggered a bond market rally, which was brought to an abrupt end by a surprisingly strong US jobs report, a reminder that the inflation fight may not be over.
In the US, incoming data suggest that job gains reaccelerated in January and hint that broader signs of slowing at the tail-end of 2022 were a head fake.
The Euro Area economy just escaped recession at the end of last year but significantly weakened, and the near-term outlook remains bleak.
Q4 real GDP will likely show that the UK has avoided a technical recession for now, while January data suggest that economic activity is weakening further, in line with our forecast of a shallow recession.
In Japan, wage growth and inflation may evolve in a way that sets the stage this spring for the revising of its yield curve control policy.
In China, the faster recovery in services sectors, earlier arrival of herd immunity, and more policy support suggest upside risks to our conservative GDP growth forecast for 2023.
In the Emerging Asia region, China’s reopening has yielded limited benefits to regional exports so far. Korean exports fell more than expected, but worse is yet to come, in our view. We expect hikes by central banks in India and Malaysia.
In EEMEA, the composition of Russia's crude oil trade flows has considerably shifted in the past year but the EU ban/price cap on its oil products may prove more challenging to re-direct. Elsewhere, central banks are done with the tightening cycle across EEMEA.
In Latin America, given supply chain disruptions have mostly already been solved, the positive effects from China’s reopening might be limited this time, and might not be accompanied by a major boost in construction and less spillover.
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