This week all attention will focus on Trump’s tariff actions announced on 1st Feb. These tariffs take effect from 4th Feb so there is still a 48-hour window in which either a judicial sentence can strike down it’s impact or Canada/Mexico come around to negotiate with Trump and delay the onset of tariffs. But considering that Trump’s favourite indicator of his performance is US equities, we expect this trade war to be short lived as Trump sees the 5-6% downtick in US equity indices over the next week as tariffs take place. While Canada has already announced retaliatory tariffs, Mexico & China are also likely to announce counter measures soon. In total, this week much of the action in global markets might flow from tariff related news than macro data. The US data docket this week has a labor market focus, culminating with Friday's jobs report for January. We expect a above consensus NFP no at 200,000 (market estimates currently average 170,000). We expect a stronger than consensus ISM manufacturing & weaker than consensus ISM services. In Fed speak, we have several speakers lined up this week whose speeches will be heavily scrutinized for any signs about how Fed officials are incorporating news on the administration's plans and priorities. In UK we expect a 25bps cut by BOE in it's 6th Feb meeting. We think the Bank will lower rates each quarter for the next year, to 3.75% by the end of this year and a terminal rate of 3.50% by February 2026. In Eurozone data, We forecast Euro area HICP inflation in Jan’25 likely printed at 2.4% y-o-y, remaining sticky, while core HICP inflation likely edged lower by 10bp to 2.6% y-o-y.
