Spyridon Kokas
Research Analyst, The Officials
Lagade to Leave ECB, Big Tech, UK Inflation Eases, Data Today
Lagarde to exit ECB early; US savings slide, Big Tech trims buybacks; Japan to invest in US; UK inflation cools.
Breaking! Christine Lagarde to leave the ECB before her term ends in October 2027.
French elections are set for April 2027, so Lagarde wants to give enough time to Macron and Merz to pick the successor before any changes in the political landscape.
America might be printing good economic data, but the issues of the country are more visible among middle-to low-income people. Wallets are bleeding, life is getting expensive and personal savings have fallen to the lowest level since 2008 (if we exclude COVID distortions). Personal savings have dropped by nearly $470 billion in just 10 months, seeing the savings rate 2% lower since April to just 3.5% (Chart 1)
Big tech are trying to save a bit too, with the likes of Amazon, Google, Microsoft, Meta and Oracle cutting share buybacks to their lowest since 2018 (Chart 2). Major AI capex plans mean the slack has to be cut elsewhere, contributing to the share price weakness of this year so far – the S&P 500 has been going sideways, down 0.5% from the 2 January open. Investors are trimming their Amazon exposure: Buffet’s Berkshire Hathaway announced it sold 77% of its Amazon, stake in Q4 2025, worth $1.7 billion.
The first evidence Trump trade deals aren’t entirely fictitious: Japan plans to invest $36 billion into US oil, gas and critical mineral projects. US tariffs on Japanese goods remain at 15%. Lutnick explains the partnership as “The proceeds are structured so Japan earns its return, and America gains strategic assets”.
UK inflation eased to a 10-month low at 3% y/y in January, down from 3.4%, further supporting the case for a cut from the BoE this year. Lower petrol, airfares and food prices drove the decline, while goods inflation slowed to 1.6%. However, services inflation remains sticky at 4.4% and core inflation rose to 3.1%. Markets continue to price two 25bp cuts this year, though hawkish MPC members may urge caution while underlying price pressures persist (Chart 3).
Data today: MBA mortgage apps, building permits, housing starts, durable goods, industrial production, FOMC minutes
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