Coronavirus cases worldwide decrease significantly as vaccination campaigns progress. Markets react with slight stock market declines and yield rallies.

Last week’s events

Europe
Advances in vaccination have caused rallies in some economic sentiment indices such as the German ZEW, which went above 70 points and back to levels not seen since September last year and not previously reached since 2006. The PMIs for both Germany and the UK were also well above expectations, although it is true that in the UK they were at significantly lower levels and the data was accompanied by retail sales in January which fell sharply by -8.2% compared to December.

USA.
Very good macroeconomic data in the US where we highlight the strong rebound of more than 5% in retail sales in January as well as in the PPI which soared by 1.3%. Also noteworthy was the Philadelphia Fed manufacturing index, which despite coming in below last month’s reading, came in at 23.1 points, 3 points above expectations and at historically high levels.

The week ahead

Europe
ifo business climate index to start the week. We will have to be attentive as it is a similar indicator to the ZEW that we knew last week, but from a supply side perspective. On Tuesday we will have the final inflation data for the Eurozone, which is not expected to be much changed from the 0.9% y/y that the preliminary data showed last week. Also, the final GDP data for Germany in the fourth quarter is expected to show a meager 0.1% growth.

USA.
A busy week for macro data with special attention to the Conference Board’s consumer confidence index, durable goods orders, preliminary GDP for the last quarter of 2020 and home sales data.