US payrolls rise, but wage growth slows
The January employment report was somewhat less rosy than the 227,000 rise in payrolls would indicate. A downward revision from 204,000 to 164,000 in November payrolls saw the three-month moving average drop to 183,000 from 187,000, even after today’s strong headline print. Wages rose only 2.5% year over year in January, compared with 2.9% in December. The unemployment rate ticked up to 4.8% in January from 4.7% in December, though the labor participation rate rose to 62.9% from 62.7% a month ago.


Parliament gives May green light for Brexit
The United Kingdom’s parliament voted overwhelmingly in favor of advancing a bill to begin the Brexit negotiation process. Prime Minister Theresa May has set a 31 March deadline for invoking Article 50, though there was much speculation this week centering around 9 March, as that date coincides with a European Council summit.


Fed leaves policy unchanged, notes improved sentiment
While the US Federal Reserve left monetary policy unchanged at its first meeting of 2017, the Federal Open Market Committee noted improved measures of consumer and business confidence of late. Presumably, improved sentiment will manifest itself in faster economic growth later this year. The market has been dialing back rate hike expectations in recent weeks. Just less than two 25-basis-point hikes are expected in 2017, down from expectations of three shortly after the Fed raised rates in December.


Trump calls out trading partners
US president Donald Trump, and members of his administration, this week chided major trading partners for manipulating their currencies. China, Japan and Germany were all named, resulting in currency market volatility. Japanese prime minister Shinzo Abe noted that Japan is abiding by the G20 agreement not to employ competitive devaluation, noting super-loose Bank of Japan monetary policy is meant to stave off deflation. German chancellor Angela Merkel said the European Central Bank is independent and that she does not question its policy.


Eurozone grew faster than US in 2016
Based on preliminary Q4 gross domestic product figures, the eurozone grew 1.7% in 2016, compared with 1.6% for the US. That’s the first time the eurozone has grown faster than the US since 2008. Eurozone joblessness fell to a seven-year low in 2016, while consumer prices rose 1.8% versus a year ago, reflecting rebounding oil prices. 


IMF: Greek debt load could become “explosive”
If Greece does not vigorously enact economic reforms, and if short-term debt relief is not granted, its debt load could become explosive by 2030, the International Monetary Fund warned this week. Given the European electoral calendar, investors are concerned that if an agreement on debt sustainability is not reached by the end of February, another EU financial crisis may unfold.


Global manufacturing upswing continues
Purchasing managers' indices showed continued improvement in global manufacturing. The United States, the United Kingdom, Japan, China and the eurozone all reported solid manufacturing sentiment in January, though service-sector sentiment cooled somewhat.


Trump to call for regulatory review
President Trump is expected to sign an executive order on Friday that establishes a framework for scaling back the Dodd-Frank financial reform law enacted in the wake of the global financial crisis. Also set for review is the US Department of Labor’s fiduciary rule, which had been scheduled to take effect in April.



  • China reports its foreign exchange reserves on Tuesday, 7 February
  • The Reserve Bank of Australia holds a rate-setting meeting on Tuesday, 7 February
  • China reports its trade balance on Wednesday, 8 February
  • Canada releases its January employment report on Friday, 10 February


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Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg News;Financial Times;;;


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