Industrial Production Data Due at 0700 GMT

Following yesterday’s factory orders data, consensus expects German industrial production to recover somewhat in January, expanding +1.4% m/m after the -3.1% m/m slump in December.

• Energy-intensive sectors continue to account for the starkest contractions, as the high cost of production continues to hamper activity.
• Manufacturing orders were more robust than anticipated in January, growing +1.0% m/m and boosted by export and aircraft orders.
• Current industrial production data remains clouded by ambiguity of the extent of pandemic backlogs propping up production levels, possibly masking weaker underlying growth.
• German January PMI data remained contractionary, yet moderated for a third month as cost pressures, supply bottlenecks and recessionary fears continued to ease.
• Markets go into the data pricing a 49bp for the March meeting and a terminal rate of 163bp by October, an increase from 156bp ahead of Fed Chair Powell’s testimony.