Daily Report 02/02/2022

Nationwide reported an increase in UK house prices of 0.8% for January with a year-on-year increase of 11.2% from 10.4% previously. UK mortgage approvals increased to 71,000 for December from 67,900 the previous month and above consensus forecasts. There was a slight overall slowdown in net lending to individuals to £4.4bn from £4.9bn the previous month, although slightly above market expectations with a solid increase in consumer credit. The final UK PMI manufacturing index was revised higher to 57.3 from the flash reading of 56.9. There was a slight slowdown in new orders growth while there was an easing of supply-side pressures. There was also a net easing of upward pressure on costs for the month. There was limited impact from the data, although overall Sterling sentiment held firm amid expectations that the Bank of England would sanction another interest rate increase at this week’ meeting. There are strong expectations that the bank will raise rates to 0.50% on Thursday with higher yields underpinning the UK currency.

No Key Data

The final Eurozone manufacturing PMI index was revised slightly lower to 58.7 from the flash reading of 59.0 with a significant miss for the Italian reading while the Spanish reading met market expectations. Germany recorded a sharp unemployment decline of 48,000 for January after a decline of 29,000 the previous month and compared with a decline of around 5,000. The German 2-year yield increased to a 6-year high which helped underpin confidence in the Euro. The single currency maintained a firm tone in European trading on Tuesday and pushed to higher against the dollar. The Euro was hampered to some extent by tough rhetoric from Russian President Putin over Ukraine, although there was no sustained selling at this stage and the Euro held firm.

Key Data 

10.00 Consumer Price Index – Core (YoY) (Jan) Exp. 1.9% Prev. 2.6%
10.00 Consumer Price Index (YoY) (Jan) Exp. 4.4% Prev. 5%

The US ISM non-manufacturing index declined to 57.6 for January from 58.8 the previous month and in line with consensus forecasts. There was a slowdown in new orders growth and production growth while order backlogs also grew more moderately on the month. Employment increased moderately on the month while prices increased at a faster rate, although the prices component remained below levels recorded late in 2021. JOLTS data recorded an increase in job openings to 10.93mn for December from 10.78mn the previous month and above market expectations of 10.30mn. The focus will shift to the US jobs data with the ADP released on Wednesday ahead of Friday’s employment report. Philadelphia Fed President Harker did warn that the forthcoming employment report could be weak due to an Omicron impact with markets expecting a sharp slowdown in job growth for the month.

Key Data 

13.15 ADP Employment Change (Jan) Exp. 207K Prev. 807K