2020 Is Off to a Good Start

U.S. Review

2020 Is Off to a Good Start

• Most of this week’s economic reports showed the economy ended 2019 with strong momentum, while the Senate passage of the USMCA and the signing of Phase I of the China trade deal reduce some of the uncertainty hanging over the outlook.
• Mild weather helped housing starts surge 16.9% in December to a 1.61 million-unit pace, the highest in 13 years.
• Manufacturing surveys from the New York Fed and Philadelphia Fed both rose more than expected in December.
• December retail sales were soft, with a 0.5% gain in core retail sales offset by downward revisions to the prior two months.

Global Review

Central Banks Keeping It Easy?

• Data this week continued to point to further easing from the Bank of England, while dovish commentary from policymakers remains consistent with that narrative. We acknowledge that the case for a BoE rate cut has risen dramatically over the past week, and although our official call is for no change in January, we nonetheless agree that a rate cut is a distinct possibility.
• In emerging markets, both Turkey and South Africa’s central banks cut interest rates this week, given subdued GDP growth in each country. Elsewhere, Chinese GDP growth held steady in the fourth quarter, and December activity data exceeded expectations, adding to signs of a stabilizing Chinese economy.