In a week marked by significant economic data releases, global markets are navigating a landscape of mixed signals. Portugal reported a slight uptick in its unemployment rate for the fourth quarter, while France experienced declines in manufacturing production both month-on-month and year-on-year. Meanwhile, European Union bond yields saw a decrease, reflecting cautious investor sentiment. In Russia, real retail sales and industrial production figures provided a positive outlook for December. As the Bank of England prepares for potential easing measures, the USD/JPY currency pair weakened following strong wage data from Japan. Additionally, China's Caixin PMI Services index indicated slower growth, and South Korea's consumer price index rose above target for the first time in seven months.
Portugal's unemployment rate edged up to 6.1% in the fourth quarter, signaling potential challenges in its labor market. Despite this increase, the rate remains relatively low compared to historical standards. Economists will be watching closely for any further signs of labor market weakness, which could impact household spending and overall economic growth.
France's manufacturing sector faced setbacks in December, with production declining by 0.7% month-on-month and 2.6% year-on-year. These figures underscore the ongoing challenges facing French manufacturers, as global supply chain disruptions and weak demand continue to weigh on output. The decline in manufacturing production raises concerns about the strength of France's economic recovery and its ability to maintain momentum amid external pressures.
European Union bond yields declined by approximately 4 basis points, reflecting investor caution amidst geopolitical tensions and economic uncertainties. Lower bond yields typically indicate increased demand for safer assets, as investors seek refuge from potential market volatility. This trend highlights the ongoing concerns over inflationary pressures and the future direction of monetary policy within the Eurozone.
In Russia, December's real retail sales showed an estimated year-on-year increase of 6.5%, while industrial production rose by 4.2%. These positive figures suggest a robust recovery in consumer spending and industrial activity, driven by improving economic conditions and higher commodity prices. Russia's economic resilience is further supported by strong demand for its energy exports and strategic investments in key sectors.
The Bank of England is expected to resume its easing policy with a 25 basis points interest rate cut. This anticipated move aims to support the UK economy amidst slowing growth and rising inflationary pressures. The BOE's decision reflects its commitment to maintaining financial stability and fostering conditions conducive to economic expansion.
Following the release of higher wage data during the Asian session, the USD/JPY currency pair experienced a decline. Japan's labor cash earnings registered its largest year-on-year rise since 1997, increasing by 4.8% compared to an expected 3.6%. This surge in wages indicates a tightening labor market, which could lead to increased consumer spending and bolster economic growth.
China's Caixin PMI Services index for January stood at 51.0, falling short of the expected 52.4. The slowdown in service sector growth reflects ongoing challenges faced by Chinese businesses, including regulatory changes and pandemic-related disruptions. Despite this deceleration, the index remains above the 50-mark, indicating expansion in the service industry.
South Korea's consumer price index saw its annual pace move back above target for the first time in seven months. This rise in inflation is attributed to higher costs for food and energy, as well as increased demand following the easing of pandemic restrictions. The central bank will need to carefully balance its monetary policy to address inflationary pressures without stifling economic recovery.
The Debt Management Office (DMO) successfully sold £2.0 billion in 1.5% July 2053 Green Gilts with an average yield of 4.831% and a bid-to-cover ratio of 3.15x. The strong demand for these long-term bonds highlights investor confidence in sustainable investments and the UK's commitment to addressing climate change through green financing initiatives.