Good morning! Here’s what you need to know in markets on Tuesday.
Chinese inflationary pressures went up a cog in January, led by another enormous surge in producer price inflation (PPI). According to China’s National Bureau of Statistics (NBS), PPI jumped by 6.9% from a year earlier, the largest annual increase reported since August 2011. It was well above the 6.3% increase expected, and followed a 5.5% lift in the year to December.
One in every five UK startups intends to open a European office due to Brexit, according to survey results published Tuesday by Silicon Valley Bank. The technology bank’s annual “Startup Outlook Survey” found that 21% of UK startups are planning to open up a new office in cities such as Berlin, Paris, and Stockholm, which are all trying to take on London’s Tech City.
It is inflation day in the UK. At 9.30 a.m. GMT (4.30 a.m. ET) Brits will find out how much prices rose in January, when the Office for National Statistics releases its latest inflation numbers. The key reading will be CPI, or Consumer Price Inflation and it will be closely watched. “Inflation will continue to take big upward steps over the coming months, as retailers pass on to consumers large increase in import prices and energy companies increase tariffs,” Samuel Tombs of Pantheon Macroeconomics wrote in a note on Tuesday.
Steven Mnuchin was confirmed by the US Senate on Monday night as the new secretary of the Treasury. Mnuchin’s confirmation came down nearly on a party-line vote of 53 to 47, with no Republicans voting against the confirmation. Mnuchin, a former Goldman Sachs banker and hedge fund manager, came under fire during his confirmation for various mistakes in financial disclosures to the Senate, as well as several previous investments.
Bank of Japan Governor Haruhiko Kuroda said on Tuesday the central bank will not change its bond yield targets just because global long-term interest rates are rising. “Our monetary policy is conducted solely for the purpose of pulling Japan’s economy out of deflation and achieving our 2 per cent inflation at the earliest date possible,” Kuroda told parliament.
Chief executives of some of America’s largest retailers, including Target and Best Buy, are headed to Washington this week to make their case that a controversial tax on imports would raise consumer prices and hurt their businesses. According to a Reuters report, a group of eight retail bosses, that also includes chief executives of Gap and Autozone, will meet on Wednesday with Kevin Brady, chairman of the tax-writing House Ways and Means Committee, and with members of the Senate.
A new poll of voters in the upcoming French elections shows National Front candidate Marine Le Pen solidifying her lead as the most popular politician in France in the first round of votes. But the same poll shows her ultimately losing to Emmanuel Macron, the social/liberal candidate, in the second round runoff.
President Trump’s National Security Adviser Michael Flynn abruptly resigned Monday evening, amid an uproar over conversations with a Russian ambassador to the US and his broader dealings with Russia. The news comes after an earlier report that Flynn could be susceptible to Russian blackmail, according to an assessment from the Department of Justice that was compiled late last month.
Europe was too pessimistic about Brexit’s economic impact on Britain. The EC on Monday hiked its UK GDP growth forecast for this year to 1.5%, up from an earlier estimate of 1% made in November, according to Bloomberg. The forecast for 2018 remains unchanged at 1.2%.
An economic trend that ensured British prosperity for the last 136 years just went into reverse. Data published on Monday by the Resolution Foundation show that for the first time in more than 100 years the current generation of workers — millennials — are doing worse than the generation before them, Generation X. Generational income growth has stopped.