Chart of the Day

The US ISM manufacturing index fell again in January and there are warning signs of further falls on the horizon. The detailed forward-looking indicators from the Philly Fed survey suggest the ISM index could continue to decline by much further in the coming months, implying softer manufacturing growth will drag US GDP growth down with it. If that occurs, then expectations for corporate earnings growth could also be cut, at just the time when many investors are hoping that stronger earnings will offset the negative impact of rising interest rates.

Macro

For now, the ISM index is still consistent with health industrial production growth.

The prices paid component showed renewed signs of inflationary pressures.

UK house price inflation according to Nationwide accelerated to 11.2% in January but realtors' expectations point to weaker price growth ahead.

The UK credit impulse has also turned negative.

The eurozone unemployment rate fell to 7.0% in December, taking it below the pre-Covid rate.

Markets

Iron is making a comeback.

With equities rebounding, the US put/call ratio has declined sharply.

The Nasdaq has rebounded despite little change in five-year real interest rates.

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