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Week Ahead (1/2)

UK
  • Last week was a big week for UK data. Labour market was largely in line with expectations while inflation data was higher than expected (and now has been 4 out of the last 5 prints). Friday’s data was much weaker, however, with consumer confidence missing expectations and retail sales much weaker than expected. The latter part of last week also saw a more general risk-off move to global markets as concern is growing over a possible Russian invasion of Ukraine. Markets are back to pricing in around a 90% probability of a February hike, this is the same level as the beginning of last week but down from the peak of around 105% seen after the inflation data on Wednesday. Similarly we are back to around 4 hikes fully priced in by the November meeting, again the same as a week ago, down from around 4.4 hikes on Wednesday.
  • Looking ahead to this week, we have flash PMI data due for release today which will be interesting (but is of lesser importance to the MPC than last week’s data). Outside of that we only have tier 2 data like public sector borrowing, CBI data and Nationwide house price data.

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