The Week Ahead - 20 - 24 January 2025

United States – On Monday evening, Donald Trump will be inaugurated as the 47th president of the United States. Allegedly, he has more than 100 executive orders ready to be signed on day one, and the details are as of yet unknown. To put that in context, Biden signed 17 on day one and 37 in his first week. We're likely in for a rapid implementation of some new policy, although the bills with large macro impact are likely to be months away. End of the week we get the S&P PMIs. We expect a small improvement in manufacturing and a small decline in services, not changing the qualitative picture of manufacturing at or below neutral, and services in highly expansionary territory.

Eurozone – The flash PMIs for January are likely to show a pickup in manufacturing from very weak levels, reflecting a recovery in consumer retail spending. It is probably too soon to expect significant frontloading effects ahead of looming US trade tariffs. The services PMI should indicate continued modest growth. Combined, the composite PMI is likely to move just above the 50 mark separating expansion and contraction.

Asia – All eyes will turn to the Bank of Japan (BoJ) on Friday. We expect the BoJ to continue its very gradual hiking path with a 25bp hike to 0.50%, in line with consensus, partly because higher wage growth has become more entrenched in Japan. Leading BoJ officials have also hinted at such a move recently. On Monday, general expectation including ours is for Chinese banks to hold the 1-year loan prime rate at 3.10%, although we expect more RRR and policy rate cuts going forward (but the central bank will likely take aboard currency considerations in timing its next rate cuts).