GLOBAL MORNING BRIEFING: US Inflation & Mexico's Rate Decision

Thursday’s key early points of interest focus on the Scandis, with both Norwegian inflation and the Swedish monetary policy decision due. This afternoon markets will focus on the US January CPI print, which comes out with the weekly initial jobless claims number. This evening concludes with the Mexican central bank publishing their rate decision.

Norway CPI to Have Peaked (0700 GMT)

Consensus sees Norwegian headline inflation easing to +4.2% y/y in January, down from +5.3% y/y in December, which was Norway’s highest reading since 2008. This would be the first softening following two consecutive months of CPI growth on both readings, with the January print to contract to -0.1% m/m, dipping from +0.7% m/m in December. Household utilities remained the key upwards driver, however transport and hospitality cost inflation also added inflationary pressure.

Norges Bank hiked for the first time since the pandemic onset both in October and January by 25bp to a total of 0.5%. Today's data will offer confirmation of whether inflation has peaked, with the next policy rate decision due at the end of March.

Riksbank Interest Rate Decision to Hold (0830 GMT)

The Swedish central bank will likely keep rates unchanged at 0%. In December the Swedish inflation rate was at +3.9% y/y, up from +3.3% y/y in November.

This meeting is expected to keep the interest rate unchanged and MNI expects a hike to be signalled by Q2-24, with a small probability of a hike in late 2023. Markets will be watching the decision on whether to continue Q1 pace of reinvestments or to end purchases.

US CPI Surge to Continue (1330 GMT)

Markets are pricing another multi-decade high in today’s US headline inflation print, projected to reach 7.2% y/y in January, edging upwards from 7.0% y/y seen in December. Core inflation is seen expanding to +5.9% y/y, up 0.4 points from December. On the month, CPI is expected to moderate slightly to +0.4% m/m in January, following +0.5% m/m in the month prior.

The CPI print could shed light upon the magnitude of the expected FOMC March hike, with an upside surprise likely to support a 50bp kick-off.

Mexico Interest Rate Decision at + 50bp (1900 GMT)

A hike of 50bp is expected from Banxico, which would bring the target rate up to 6.00%, thereby continuing their consistent hiking cycle which began in June 2021. January’s headline inflation rate edged downwards to +7.1% y/y from the over 20-year high of 7.4% y/y in December, implying that Mexico’s inflation is likely to have peaked. Despite GDP contracting by 0.1% q/q in Q4 2021, the persistent upwards trend in core inflation means holding off on a further hike is all but out of the picture.

Today’s key policymaker appearances are the ECB’s Luis de Guindos and Phillip Lane in the early afternoon, followed by the BOE Governor Andrew Bailey’s speech, for which text will be released at 1700 GMT. Links to events are in the calendar below.

Date	GMT/Local	Impact	Flag	Country	Event
10/02/2022	0001/0001	*		UK	RICS House Prices
10/02/2022	0101/0101	**		UK	IHS Markit/REC Jobs Report
10/02/2022	0700/0800	*		NO	CPI Norway
10/02/2022	0830/0930	**		SE	Riksbank Interest Rate
10/02/2022	1000/1100			EU	European Commission Winter Economic Forecasts
10/02/2022	1200/1300			EU	ECB de Guindos on Europe post-covid at LSE
10/02/2022	1315/1415			EU	ECB Lane on supply chain disruptions panel discussion
10/02/2022	1330/0830	**		US	Jobless Claims
10/02/2022	1330/0830	***		US	CPI
10/02/2022	1330/0830	**		US	WASDE Weekly Import/Export
10/02/2022	1530/1030	**		US	Natural Gas Stocks
10/02/2022	1630/1130	*		US	US Bill 08 Week Treasury Auction Result
10/02/2022	1630/1130	**		US	US Bill 04 Week Treasury Auction Result
10/02/2022	1700/1700			UK	BOE Bailey speech at TheCityUK Dinner
10/02/2022	1800/1300	***		US	US Treasury Auction Result for 30 Year Bond
10/02/2022	1900/1400	**		US	Treasury Budget
10/02/2022	1900/1400	***		MX	Mexico Interest Rate