Inflation, growth and signals from central banks

This week promises to be particularly busy with macroeconomic events that can shape financial market sentiment. As investors continue to navigate expectations of a controlled slowdown and uncertainty about the timing of central bank moves, attention will be focused on inflation, industrial production, and the labor market, with an agenda spanning the United States, the euro area, and the United Kingdom.

 

UK: GDP weak and industry still under pressure

The United Kingdom will open the week with a series of key economic data. November's GDP is expected to be essentially unchanged on a monthly basis, following the contraction recorded the previous month, while annual growth is expected to remain just above 1%. These figures confirm an economy struggling, but not yet in technical recession.

On the industrial front, production is showing mixed signals: the monthly figure is expected to recover slightly, while the annual figure remains negative, reflecting the structural difficulties of the British manufacturing sector. The trade balance will also continue to be closely monitored, amid a still-large deficit that weighs on the pound and growth prospects.

 

Eurozone: Inflation under control, growth fragile

In Europe, the focus will be primarily on inflation and industrial activity. In Germany, December inflation is expected to remain around 1.8% on an annual basis, a level consistent with price dynamics now normalizing compared to the peaks of the previous two years. The harmonized index also remains close to 2%, the European Central Bank's reference threshold.

In Italy, annual inflation is expected at 1.2%, while industrial production in November is expected to rebound on a monthly basis after the previous decline, although it remains negative on an annual basis. Overall, euro area data continues to depict weak and uneven growth, making the ECB particularly cautious in outlining the future path of interest rates.

The minutes of the last meeting and the remarks of the Governing Council members will therefore be crucial to understanding whether the institution is gaining greater confidence in the return of inflation or whether a wait-and-see approach will continue to prevail.

United States: Inflation and the labor market under scrutiny

In the United States, the most anticipated data of the week will be inflation. The December consumer price index is expected to accelerate slightly on a monthly basis, with the annual figure around 2.7%. The core component will remain crucial for assessing whether the disinflation process is proceeding sufficiently convincingly to allow the Federal Reserve to ease monetary policy later in the year.

Also pay attention to industrial production, expected to grow moderately, and to the capacity utilization rate, which should remain stable at just above 76%, a sign of a still resilient economy but far from overheating.

The labor market will be monitored through initial jobless claims, expected to be just above 200,000, a level that continues to indicate a gradual but orderly cooling of employment.

 

Asia: Chinese stimuli and mixed signals from the Pacific

Important indications will come from Asia, especially from China, where credit and money supply data will provide a measure of the authorities' efforts to support the economy. Money supply growth remains around 8%, while the trend in new loans will be monitored to assess the effectiveness of the stimulus measures.

In Japan, the current account remains largely positive and bank credit growth continues to show solid momentum, while in Australia and New Zealand, PMI data will help outline the state of domestic demand in an environment of still-tight interest rates.

 

Raw materials and investor positioning

On the commodity front, oil will remain sensitive to US inventory data, which in the latest survey showed a significant decline, providing support for prices. Completing the picture, CFTC data on speculative positioning will offer a useful snapshot of investors' attitudes towards currencies, stock indices, and commodities.

 

A still fragile balance

Overall, the week could reinforce the scenario of a controlled slowdown, with gradually declining inflation and moderate growth. However, market sensitivity to data remains high, and even a few surprises will be enough to reignite volatility. At this stage of the cycle, the consistency of the macroeconomic framework and the forward-looking guidance emerging from central banks will matter more than the headline numbers.