Intesa Sanpaolo : Globally, the winter wave of the pandemic is regressing from its January peaks, but remains very active.
Weekly Economic Monitor – 12. Februar 2021
Intesa Sanpaolo – Research Department
New cases are largely concentrated in Europe and in the Americas. The vaccination campaign is still negligible in the global context, and is meeting with difficulties in Europe; however, in the advanced countries, herd immunity still seems to be a goal achievable by the end of the year. Several countries have decided to extend lockdown measures, also in light of the emergence of new strains of the virus, whereas others continue to take a more tolerant approach. The downside risks envisaged for 1Q 2021 have materialised in Europe.
Fed : in waiting for “further substantial progress” to be made towards maximum “inclusive” employment, the FOMC is unlikely to “even only think of removing support” in the foreseeable future. Policy support is still essential, with fiscal policy playing a dominant role. The risk of a “sudden” recovery of inflation is not on the Fed’s radar, for now. Much will depend on the size of the anti-COVID fiscal package designed by the Biden administration.
The week’s market movers
In the Eurozone , the first confidence surveys for the month of February (PMIs and German ZEW) should outline weak economic activity in most euro area countries, driven down once again by services. The second reading of 4Q Eurozone GDP should confirm the -0.7% q/q contraction indicated by the flash estimate (-5.1% y/y); the first reading for the Netherlands could drop less than expected. Also in 4Q, the French unemployment rate should show a moderate rise. In December, industrial output in the euro area is expected to return into negative territory. Lastly, the final estimate of January consumer prices should confirm the initial reading, with inflation on the rise in annual terms in the Eurozone (0.9%), in France (0.8%), and in Italy as well (0.5%).
This week, many important data releases are lined up in the United States, but the focus will be on the advancement of the new anti-COVID package being designed by the Democrat leadership. The first set of February survey data should outline a further expansion of activity, held back somewhat by bottlenecks on the supply side. Among January data, retail sales should rebound sharply, fuelled by the increase in household disposable income and by the improvement of the health picture. Industrial output is expected to expand further, in spite of the automotive sector setback. Data on the residential housing sector should be positive again, despite a physiological slowdown.
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