Inflation declines in the world's two largest economies

Chinese inflation at 2% in 2022. In December, the consumer price index rose by 1.8% year-on-year, compared to 1.6% a month earlier. By 2022, the Chinese government was targeting an average inflation rate of 3%, against the backdrop of soaring global commodity and food prices.

Inflation in the US fell in December for the first time in two and a half years. The consumer price index fell by 0.1% on a monthly basis, its first decline since May 2020. Over a year, prices are up by 6.5%. The previous month it was still at 7.1% after peaking in November at 9.1%. Among the factors that contributed to this decline, energy prices fell by 12.5% over the month. The next Federal Reserve policy meeting will be held on 1 February and the market expects a 0.25% rate hike.

German Consumer prices rose by 9.6% year-on-year in December, after +11.3% in November, confirming their first estimate. The annual inflation rate fell for the second month in a row, thanks to lower energy prices and German government support.

The Swiss job market recorded a 23% increase in job offers compared to the previous year.

The BOJ maintained its short-term rate at -0.1% and did not raise the ceiling on 10-year bond yields. It changed some rules to show its determination to keep the yield curve under control. Immediate impact on the USD/JPY which was trading at 128.30 before the announcement and rose to 131.58 early this morning and now back to 128 level.

Intentions for rate hikes are revised downwards in European Central Bank. Some ECB officials are calling for 50 basis points on 2 February and 25 basis points on 16 March. The EUR/CHF is back on the decline. It traded at a low of 0.9936 against CHF and 1.0767 against USD.

International Monetary Fund Managing Director Kristalina Georgieva said Tuesday that global economic growth is expected to bottom out in 2023. According to the institute, global growth is expected to slow to 2.7% this year, down from about 3.2% last year.

Yesterday, European yields fell quite sharply despite high inflation figures such as the German inflation figure of 8.6%, leaving market participants anticipating a tightening by the ECB. The 10 year Bund yield closed lower at 2.08%. The 10-year Swiss government bond yield fell to 0.998. As for the 10-year US Treasury yield, it is now at 3.50%.