Newsquawk Week Ahead: US NFP and CPI, Japanese Election, UK GDP and China Inflation

• Sun: Japanese Average Cash Earnings, Japanese Snap Election
• Mon: Swiss Consumer Confidence (Jan), Mexican
  Inflation (Jan), US Consumer Inflation Expectations (Jan), Australian
  Household Spending (Dec)
• Tue: EIA STEO; Norwegian prelim. CPI (Jan), US NFIB (Jan), Weekly ADP, ECI (Q4), Export/Import Prices (Dec)
• Wed: BoC Minutes (Jan), OPEC MOMR; ECB Wage Tracker (post-meeting); Chinese Inflation (Jan), Norwegian GDP (Q4), US NFP (Jan)
• Thu: IEA OMR, EU Informal Leaders Retreat;
  Japanese PPI (Jan), UK GDP Prelim. (Q4), GDP (Dec), US Weekly/Continuing
  Claims; Existing Home Sales (Jan), South Korean Export/Import Prices
  (Jan)
• Fri: Indian WPI (Jan), Swiss CPI (Jan), EZ Prelim. Employment (Q4), GDP 2nd (Q4), US CPI (Jan)

Japanese Average Cash Earnings (Sun):

Japan’s
December average cash earnings data is due on Sunday, with consensus
expecting headline wages to accelerate to 1.0% Y/Y from 0.5%. The
November release showed a sharp slowdown in wage growth, largely
reflecting a steep fall in one-off bonus payments outside peak payout
periods, leaving real wages deeply negative amid still-elevated
inflation. ING expects a clearer rebound in December, supported by
strong winter bonuses and recent easing in inflation, which should help
real cash earnings turn positive. The desk says a sustained improvement
in wage dynamics would bolster the BoJ’s confidence that a wage-price
cycle is taking hold, supporting the case for further rate hikes from
Q2.

Japanese Snap Election (Sun):

Japanese PM Takaichi
called a snap election for the 8th of February. Aiming to capitalise on
her high approval rating and extend LDPʼs slim majority in the Lower
House, which would allow her to pass policy with less friction. A recent
poll (Feb 2) via Asahi shows that the ruling coalition could secure
more than 300 seats, far surpassing the 233 required for a simple
majority; putting the LDP-JIP partnership on course to potentially
secure a two-thirds ‘super’ majority (310 seats). Note, should the
LDP-JIP secure a two-thirds majority, it can override the Upper House to
pass legislation. Exit polls are typically released within minutes of
polls closing (20:00 JST / 11:00 GMT / 06:00 EST), while a large share
of single-member district results are reported within the following 2–4
hours. Under a LDP victory, the immediate market reaction is expected to
see a steepening of the JGB yield curve, as it would potentially give
the PM scope to pursue expansionary fiscal policies. Credit Agricole
expects gains in the Nikkei and USD/JPY alongside curve steepening. If
the LDP-JIP bloc requires support from another party, most likely the
DPP or Sanseito, fiscal and political uncertainty could be priced in, as
opposition partners may push for income tax cuts or broader VAT
reductions, potentially triggering a deeper sell-off in JGBs. Should the
LDP lose, a new government would likely prompt a flatter yield curve
and JPY strength, reflecting the prospect of greater fiscal restraint
than under Takaichi and a higher tolerance for BoJ rate hikes. Credit
Agricole expects this to lift short-end yields and flatten the JGB
curve. An in-depth preview can be found here.

Japanese Economy Watchers Survey (Mon):

Japan’s
Economy Watchers Survey for January is due on Feb 9. The Current
Conditions index slipped to 48.6 in December, remaining below the 50
threshold, while the Outlook index rose to 50.5, signalling cautious
optimism for the months ahead. The survey is closely watched by the BoJ
as a leading indicator of private consumption and service-sector
momentum. Any further improvement in service-related sentiment would
support the Bank’s view that service price inflation is becoming more
durable.

BoC Minutes (Wed):

The minutes followed the January
decision to hold rates at 2.25%, in line with expectations and matching
the lower end of the BoC’s own estimate of neutral. The statement
focused on uncertainty, saying it was elevated and that risks were being
monitored closely, and added that the central bank was prepared to
respond if the outlook changed. The Monetary Policy Report left
near-term inflation forecasts unchanged but raised the fourth-quarter
2026 projection, while quarterly GDP forecasts were lifted across 2026.
Since then, Governor Macklem has warned the BoC must be careful not to
misdiagnose economic weakness amid a structural shift in the Canadian
economy following a deterioration in relations with the United States.
He said cutting rates in response to weak activity risked fuelling
future inflation if the weakness reflected lower productive capacity
rather than a cyclical demand downturn, and that overstimulating demand
when the problem was structural could delay necessary adjustment. The
BoC appears set to remain on hold for the foreseeable future barring a
sharp change in the outlook, with market pricing showing about 9bps of
hikes by year-end.

Chinese Inflation (Wed):

China is set to publish its
January CPI and PPI figures after December data showed headline CPI
rising 0.8% Y/Y, a 34-month high driven largely by food prices, while
core inflation held at 1.2% and producer prices stayed in deflation at
-1.9% Y/Y. ING expects inflation pressures to cool in January,
forecasting CPI at 0.5% Y/Y as Lunar New Year effects weigh on prices,
while PPI is seen remaining negative for a 40th consecutive month but
improving to around -1.3% Y/Y amid firmer commodity prices. Analysts
continue to warn that underlying demand remains weak despite the recent
pick-up in headline inflation, with overcapacity and factory-gate
deflation persisting as key drags. As a result, the data is unlikely to
shift expectations for further policy support this year.

US Jobs Report (Wed):

Note: the January jobs report,
originally scheduled for 6th February, was rescheduled to Wednesday,
11th February at 08:30EST/13:30GMT because of the partial US government
shutdown. Recent labour market data have shown resilience despite other
policy challenges. During the week corresponding to the traditional BLS
survey window, weekly initial jobless claims stayed low at 210k after
revisions, compared with 224k ahead of the December data. Continuing
claims eased to 1.827mln in the survey week from 1.914mln heading into
the December report. “There is no evidence that layoffs are picking up.
There are firms that are trying to reduce their headcount, but this is
being done almost exclusively through attrition rather than outright job
cuts,” Santander said, adding that “layoffs on an underlying basis are
roughly steady.” Wells Fargo expects the January report to leave the
labour market picture broadly unchanged, with payroll growth of about
80k and unemployment steady at 4.4%, noting that hiring could be
temporarily boosted by fewer seasonal layoffs. Risks to unemployment are
nevertheless seen to the upside, while benchmark revisions are likely
to show that last year’s job growth was weaker, reinforcing a gradual
cooling in labour market support for incomes and consumption. At its
January meeting, the Fed tweaked its risk characterisation of the labour
market, replacing “job gains have slowed this year, and the
unemployment rate has edged up through September,” with “job gains have
remained low, and the unemployment rate has shown some signs of
stabilisation,” which analysts described as a positive upgrade. Even so,
Chair Powell said risks to employment on both the upside and downside
have diminished but not disappeared, making it difficult to judge
whether mandate risks are fully balanced. Traders will also watch for
any impact from extreme weather. Oxford Economics said storms occurring
during the payroll reference period have historically had a greater
negative effect on net nonfarm employment and hours worked, particularly
in construction, but added that the latest storm falls outside that
window, which should limit potential downside effects on the January
report.

UK GDP (Thu):

The UK is due to release preliminary
Q4 GDP alongside December monthly output. Consensus expects Q4 GDP
growth of 0.1% Q/Q from 0.2% and 1.3% Y/Y from 1.2%, with December GDP
seen rising 0.3% M/M from 0.1%. Investec expects a softer 0.2% M/M print
for December after November’s strong 0.3% rebound, which was boosted by
a recovery in car production following the Jaguar Land Rover
cyberattack, alongside firmer retail sales. While most of the production
bounce likely occurred in November, residual strength from auto
backlogs, steady services output and a modest recovery in construction
are seen supporting December activity. On this basis, Investec forecasts
Q4 GDP growth of 0.2% Q/Q, a slight acceleration from Q3’s 0.1%, and
says this would provide a constructive handover into Q1, where growth is
expected to firm further.

US CPI (Fri):

Note: the January consumer price
report, originally scheduled for 11th February, was pushed back to 13th
February at 08:30EST/13:30GMT because of the partial US government
shutdown. While the Fed’s January statement upgraded its economic
assessment by replacing “economic activity has been expanding at a
moderate pace” with “expanding at a solid pace”, “job gains have slowed
this year” with “job gains have remained low”, and “the unemployment
rate has edged up” with it having “shown some signs of stabilisation”,
it said “inflation remains somewhat elevated”, relatively unchanged from
its prior view that “inflation has moved up since earlier in the year
and remains somewhat elevated”. At his post-meeting press conference,
Chair Powell said inflation had made limited net progress over the past
year, with core PCE showing little improvement. He said most of the
overshoot stemmed from goods prices, largely driven by tariffs, which he
characterised as a one-off rather than demand-led effect. Powell noted
that many tariff effects had already passed through the economy and
expects goods and tariff-related inflation to peak around mid-year.
Inflation remains somewhat elevated, but recent outcomes have been
broadly in line with expectations. He added that short-term market-based
inflation expectations have fully retraced, while longer-term measures
signal confidence in a return to the Fed’s 2% target. Powell said
incoming data point to clearer improvement in the outlook, adding that
confirmation that tariff effects are fading would support policy
loosening. Some analysts have recently highlighted Truflation’s
inflation measure, which suggests price pressures are easing. Pantheon
Macroeconomics, however, argues that the sharp fall in Truflation’s
daily measure overstates disinflation, noting that it is driven largely
by new rents and mortgage interest costs that respond quickly to market
shifts, while official CPI uses broader, lagged shelter measures,
implying a much more gradual decline. Pantheon sees Truflation as useful
for niche components, but not a reliable guide to headline inflation.

This article originally appeared on Newsquawk.