U.S.:
Consumer Prices in U.S. Rise for Fifth Month on Shelter, Fuel
The cost of living in the U.S. climbed for a fifth month on the back of shelter and fuel prices, pushing inflation closer to the Federal Reserve’s goal. The consumer-price index rose 0.3 percent in December, matching the median projection of economists, after a 0.2 percent gain the previous month, Labour Department figures showed Wednesday in Washington. Prices were up 2.1 percent from a year earlier, the most since June 2014. Excluding volatile food and fuel, the so-called core measure rose 0.2 percent from November. With energy costs moving higher and rents and medical costs continuing to firm up, price pressures are gaining traction in the world’s largest economy. Steady demand would allow companies to regain pricing power, further boosting inflation and strengthening the case for the Fed to keep raising interest rates this year.
<https://www.bloomberg.com/news/articles/2017-01-18/consumer-prices-in-u-s-rise-for-fifth-month-on-shelter-fuel>
Europe:
Euro zone bond yields rise as supply cranks up
Euro zone bond yields rose on Wednesday, a day after Belgium sold a record 6 billion euros worth of 10-year bonds and amid signs that Italy was on track for a large debt transaction. Investors tend to sell outstanding euro zone government bonds to make space for new supply, pushing yields higher. Some easing of Brexit-related concerns added impetus to the move. "The size of the Belgium deal shows how the governments themselves view the way in which rates are going to go upwards in the future," said DZ Bank strategist Daniel Lenz. "Therefore it is reasonable now to come up with large issuance sizes." Euro zone bond yields rose 2-4 basis points across the board on Wednesday, led by Germany’s 10-year bond, the benchmark for the region, which was up 4 bps at 0.27 percent. Italian 10-year yields were up 2 bps to 1.92 percent, in line with Spanish equivalents.
<http://www.reuters.com/article/eurozone-bonds-idUSL5N1F833P>
Asia:
China’s Central Bank Pumps Out a Record $60 Billion Before Holidays
China’s benchmark money-market rate jumped the most in two years, with record central bank cash injections being overwhelmed by demand before the Lunar New Year holidays. The People’s Bank of China put in a net 410 billion yuan ($60 billion) through open-market operations on Wednesday, the biggest daily addition since Bloomberg began compiling the data in 2004. That brings the total injections so far this week to 845 billion yuan. The interbank seven-day repurchase rate jumped 35 basis points, the most since December 2014, to 2.76 percent, according to weighted average prices. Demand for cash tends to increase before the Lunar New Year holidays, when households withdraw money to pay for gifts and get-togethers. Month-end corporate tax payments are adding to the pressure this time, with the break running from Jan. 27 through Feb. 2.
<https://www.bloomberg.com/news/articles/2017-01-18/pboc-cash-injections-surge-to-record-60-billion-before-holidays>
South America:
Brazil’s finance minister says not concerned about strong dollar
Jan 18 Brazil is not concerned about a strong dollar as domestic factors have prevailed in local exchange markets, Finance Minister Henrique Meirelles said on Wednesday at a press conference during the World Economic Forum in Davos. Central bank chief Ilan Goldfajn, who also attended the conference, reiterated the bank’s guidance on interest rates and said rate cuts should help the economy recover in 2017. The government will announce its new 2017 economic growth forecast within 10 days, Meirelles added.
<http://www.reuters.com/article/davos-meeting-brazil-idUSE4N1CO00V>
