Key international financial and economic events this week include: the Bank of Japan (central bank) holds a decision-making meeting, the World Economic Forum (WEF) annual meeting will be held in Davos, China will announce the gross domestic product (GDP) in the fourth quarter of last year, the The Producer Price Index (PPI) report will be released, which will give you a glimpse of the cooling of inflation. In addition, Japan, the United Kingdom, and the Eurozone will release the Consumer Price Index (CPI) report. At the same time, large Wall Street banks Morgan Stanley (MS-US), Goldman Sachs (GS-US), streaming media leader Netflix (NFLX-US) will successively announce their last quarter results.
This week’s trading notes (0116-0120)
1. Bank of Japan decision-making meeting
The Bank of Japan will hold a decision-making meeting on Wednesday, and the market will be curious about whether there will be another unexpected move. At the end of last year, when the yen was depreciating sharply, the Bank of Japan suddenly announced the relaxation of the yield curve control (YCC) policy, expanding the target range of the yield rate from plus or minus 0.25% to plus or minus 0.5%.
While the Bank of Japan insisted that the December policy change was not an interest rate hike, the move is seen as potentially paving the way for a rate hike. Economists generally believe that the Bank of Japan will stand pat, but a few people do not rule out the possibility that the Bank of Japan will take more action.
2. World Economic Forum
The World Economic Forum (WEF) is hosting its annual meeting this week in Davos, Switzerland. WEF recently released the latest research report warning that the “cost of living crisis” will become the biggest risk in the world in the next two years. This year’s Davos Forum returns to its usual winter format and will be held from January 16 to 20 with the theme “Cooperation in a Divided World”.
In addition, the “South China Morning Post” recently quoted people familiar with the matter as reporting that Chinese Vice Premier Liu He will go to Davos, Switzerland to attend the meeting. At the same time, according to foreign media reports, a high-level delegation from Saudi Arabia will participate in the 2023 World WEF Annual Conference in Davos, Switzerland, to strengthen international cooperation and contribute to today’s geopolitical, social, economic and Designing joint solutions to human development challenges.
3. China Q4 GDP
The latest survey released by Chinese media Caixin shows that the forecast range of China’s GDP growth rate in the fourth quarter of last year was 0.8% to 2.9%, with an average of 1.8%. The annual GDP growth rate was about 2.6%, which cannot be guaranteed. The 5.5 percent growth target set by Xi Jinping is a far cry.
Economists predict that China’s economy slowed down sharply in the fourth quarter of last year. The forecast range for the annual GDP growth rate in the quarter was 0.8% to 2.9%, with an average of 1.8%, which was 1.7 percentage points lower than in the third quarter. Most economists believe that the slowdown in China’s GDP in the fourth quarter was mainly due to the unblocking of the epidemic in December. The surge in the number of people infected with the epidemic, labor shortages, and poor logistics led to weaker industrial production.
4. PPI of major economies
The US data in December last year showed that inflation continued to cool down, and PPI data will be released this week to see whether there may be further signs of cooling down from the manufacturing sector. At present, the market estimates that the PPI in the United States in December last year increased by 7.2%, a slight decline from the previous value of 7.4%, while the monthly PPI increased by 0.2%, and the previous value was 0.3%.
At the same time, Japan, the United Kingdom, and Germany will also release the latest PPI data one after another. In addition, the euro area, Japan, the United Kingdom, Canada, and Germany will also release CPI reports this week. The market estimates that the final value of the CPI in the euro area in December last year increased by 9.2% year-on-year, which was the same as the previous value, but it may decline further on a monthly basis to -0.3%, the previous value was -0.1%.