Focus on PMIs today

The focus for the market today will be on the January PMIs for the main economies but particularly for the UK, the outturn for which is seen as key in determining whether or not the Bank of England cuts interest rates at its next meeting on January 30th. This may be overdoing it – the BOE may already have decided it will lower rates judging by comments by some officials lately – but certainty there will be greater than usual interest in this morning’s data ahead of which the pound is trading at about 84p against the euro and at $1.31 against the dollar (with the latter at $1.1050 against the single currency)

Concerns about the coronavirus weighed on equity markets again yesterday, though US indices did recover some ground into the close of business while preventative measures taken by the Chinese authorities is providing some reassurance.  Core bond yields are a touch higher this morning, having drifted lower during yesterday’s session

The ECB remained on hold at its first meeting of 2020 yesterday, noting that “incoming economic data and survey information point to some stabilisation in euro area growth dynamics” and that “measures of underlying inflation have remained generally muted, although there are further indications of a moderate increase in line with previous expectations”. It also formally launched what it expects to be a year-long review of its monetary policy strategy

Other than the PMIs there’s little else in terms of data today, though there’s a heavy schedule of numbers next week while the Fed and the BOE holds monetary policy meetings