[GTCfx]What You Missed Out On This Week? 2 - 6 February
Global Economic Snapshot
- Germany industrial orders jumped 7.8% m/m, sharply beating expectations and offering a rare bright spot for the manufacturing outlook.
- Eurozone retail sales fell 0.5% m/m, weaker than expected, pointing to soft consumer demand.
- Eurozone CPI held at 1.7% y/y, reinforcing the view that inflation pressures remain contained.
- Eurozone PMI data was broadly steady, with services at 51.6 and manufacturing still in contraction at 49.5.
- The ECB left its deposit rate unchanged at 2.00%, maintaining a cautious wait-and-see stance.
- US crude inventories fell 3.5M barrels, supporting oil prices.
- US ISM services rose to 53.8, slightly above expectations, suggesting continued expansion in the services sector.
- US ADP employment rose to 22k, well below forecasts and reinforcing signs of cooling job growth.
- US manufacturing activity improved, with the S&P Global index rising to 52.6.
- JOLTS job openings dropped to 6.54m, a notable miss and another signal for easing labor demand.
- US jobless claims increased to 231k, above expectations.
- The Bank of England kept rates unchanged at 3.75%.
- The RBA surprised markets by raising rates 25bp to 3.85%, citing persistent inflation pressures.
Fed Officials Rein in Rate-Cut Expectations
Federal Reserve Governor Lisa Cook warned that inflation risks remain tilted to the upside, pushing back against expectations for further rate cuts. She said progress on inflation has stalled above the 2% target, while the labor market appears stable and does not warrant policy easing.
Atlanta Fed President Raphael Bostic echoed the concern, saying inflation remains elevated and tariff-related pressures are not yet resolved. Bostic does not expect rate cuts in 2026, adding that the US economy continues to show resilience.
St. Louis Fed President Alberto Musalem added that rates are already near neutral and further cuts are not advisable unless inflation falls convincingly or the labor market deteriorates.
Trump Signals Confidence in Lower Rates Under Warsh
In an interview with NBC, President Trump said he expects interest rates to fall, and suggested Kevin Warsh understands his preference for lower borrowing costs. The comments reinforced market focus on the Fed leadership transition, even as policymakers continue to stress independence and caution.
Warsh Nomination Brings Scrutiny
News that Kevin Warsh is expected to be nominated as the next Fed chair has not led to major repricing in rate markets. Investors remain divided on whether a Warsh-led Fed would be more open to easing or stay firmly focused on inflation control.
While some see scope for a more flexible stance tied to productivity gains from AI, Warsh is generally viewed as an institutional figure who would respect the Fed’s independence. As a result, fears of abrupt political interference have eased somewhat, even as uncertainty remains over future policy direction.
US–India Trade Deal Takes Shape
The US and India reached a trade agreement cutting US tariffs on Indian goods to 18%. As part of the deal, the US will remove tariffs linked to India’s Russian oil imports, while India agreed to halt those purchases and diversify supply toward the US and other sources. Indian equities rallied on the news, though details and timelines remain limited.
Boeing Emerges as Early Beneficiary of US–India Reset
India is reportedly considering up to $80bn in Boeing aircraft orders as part of the broader US–India trade package. While the potential scale is significant, markets are waiting for clarity on timing, funding, and how binding the commitments will be. A Boeing-heavy deal would be a near-term positive for US aerospace.
Market Highlights
- Bitcoin erased gains made after Trump’s election win.
- Gold and silver plunged in a sharp reversal after their recent record rally.
- AMD fell 17%, its worst day since 2017, after weak guidance.
- Google beat revenue expectations and flagged increased AI spending.
- Tesla dropped to a two-month low.
- PayPal tumbled 20%, its steepest fall in four years, following a profit miss and CEO exit plans.
- Walmart reached a $1 trillion market value for the first time.
- The January US jobs report was rescheduled to Wednesday, February 11.
Disclaimer
The information in this article is for general information only and does not represent financial or investment advice. Markets are unpredictable, and past performance does not guarantee future results. Before making any financial decisions, please do your own research or consult a licensed financial advisor. We are not responsible for any loss or damage caused by reliance on this content.