Apart from Tokyo inflation figures for January, the economic calendar in Asia on Friday is fairly light, leaving investors to take their cue from the ‘risk on’ global picture.
The first estimate of fourth quarter U.S. GDP growth on Thursday was nothing short of remarkable. Not only did the 3.3% growth rate obliterate the 2.0% consensus forecast, it was higher than every one of the 87 forecasts in a Reuters poll.
That might have been rocket fuel for bond yields, were it not for inflation, as measured by the GDP deflator, falling to just 1.5%. That was below the 2.3% consensus, below every forecast in a Reuters poll, and well below the Fed’s consumer inflation goal of 2%.
Goldilocks, soft landing, no landing – whatever you call it, and whether it is by accident or design, the Fed appears to be steering the U.S. economy away from a recession that many people have been calling for over a year now.
One curiosity is the GDP figures suggest the U.S. economy grew faster than China’s in the October-December period on a nominal basis, and for the second quarter in a row too.
