What recently caught my attention in several points:
1) Big surprise: no wage increase in Japan. Yen weakened yesterday, the USDJPN went up by 0.85%. In January alone, this pair is up by 3.3% - which shows a potential change in the market's perception of the BoJ’s exit from negative monetary policy. Interestingly, in December and November the yen strengthened a lot... in December the USDJPN rate dropped by 4.9%, and in November by 2.1%.Japanese wages for November only +0.2% MoM (market expected +1.5%). In October the increase was +1.5%.If subsequent data confirm low wage pressure, we may not see any rate increases in Japan at all - especially in the context of rate cuts in 2024 virtually all over the world.
2) And no wage decline in the US, as per Atlanta wage tracker YoY unchanged at 5.2% in December. Powell certainly tracks this data (he has used it in his public presentations -see the Figure 1 below).
3) Quite hawkish statement from the central bank in Poland. This is interesting in the context of:
(i) market expectations for rate cuts in Poland (it seems that the market may be quite wrong in expecting 175 bps cuts by the end of 2025),
(ii) the potential for inflation to cause negative surprises from H2 2024 is very high... but in the meantime,
(iii) we will celebrate its decline to as much as 3.5% (headline), so
(iv) let's not forget that frozen energy prices subtract 4 pp from inflation, and restoring VAT on food would add another 0.9 pp, not to mention the reduction in drug prices in September 2023...
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