The UK labour market remains solid

Economics
This week we expect growth in US overall durable goods orders for December to slow while underlying orders (excluding aircraft) rebounded. The first estimate of Q4 GDP should show growth held up due to solid private consumption. Employment costs in Q4 are likely to have continued to rise.

In Europe business indicators should stabilise in January (German Ifo business climate and the Belgian leading indicator). In Japan we expect industrial production in December to fall as a payback after the jump in November.

Foreign exchange technical
EUR/USD: As long as 1.3025 holds, the outlook would be further down to 1.2850. Only a move back above 1.3025 would (temporarily) negate the bearish view and allow a further upward correction with 1.3115 resp 1.3250 as next resistance levels. USD/JPY: consolidation between 101.60 & 104.70. Watch which level gives way : above 104.70, the outlook would turn bullish towards 107.25 - below 101.60, the outlook would turn bearish towards 98.50.

Fixed income
Euro-zone yields back up slightly this week on stronger headline CPI figures, but the main topic was still the continuous flattening of the long end of the curve, likely driven by pensionfund-related buying. In the US, mixed economic data and weaker equities led to lower bond yields. Credit spreads were stable, but US auto credits are in the spotlight again and show strong volatility.

Equities
Although the current earnings season is not that bad, it proves to be unable to lift stock markets higher. The prudent guidance of many companies often serves as a pretext for profit taking. Unrealistic expectations are another reason, especially when we talk about internet stocks.

The fundamentals of the market still show strength, but the perception of the market has changed. This can still be considered as a normal pull-back after the rally that started in November.