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Weekly economic and financial commentary: Omicron not enough to crush the payday party

By on February 5, 2022 0

Summary

United States: Omicron is not enough to crash the Payroll Party

  • This week ushered in a wide range of economic indicators that covered everything from supply chains to the housing market, but needless to say, it was the labor market that came to the fore. Nonfarm payrolls rose by 467,000 in January, which was not only nearly four times the consensus estimate, but also well ahead of any forecast. The JOLTS and non-farm productivity pointed to a strong and thriving labor force, while the January ISM surveys and construction spending data affirmed that we are not yet off the hook when it comes to supply chain difficulties and rising prices.
  • Next week: NFIB Small Business (Tuesday), Trade Balance (Tuesday), CPI (Thursday)

International: central banks take center stage

  • The Bank of England made a hawkish monetary policy announcement, raising its benchmark rate by 25 basis points, but with several dissenting policymakers in favor of a bigger move. Given the hawkish announcement, we now expect the Bank of England to raise rates more and sooner than before. The European Central Bank kept monetary policy stable but said inflation risks were on the rise, signaling it would reassess its policy outlook in March.
  • Next week: Brazil CPI (Wednesday), Mexico overnight rate (Thursday), UK GDP (Friday)

Interest rate monitoring: the reduction in the budget deficit leads the Treasury to issue less debt

  • The federal budget deficit is narrowing sharply, and as a result the US Treasury announced this week that it will continue to reduce the size of its Treasury auctions in light of lower funding needs.

Topic of the Week: Economic Resilience and Progress in the Black and African American Community

  • The black and African American community in the United States has faced significant structural barriers over the past several centuries that have hindered full economic participation. In commemoration of Black History Month, we examine recent economic progress made by the Black and African American community, despite these obstacles.

Full report here.