Data Revisions - Spanner in the works

The global economy is increasingly getting data-dependent as major central banks reassess their monetary policy stance amid signs of peak interest rates and resilient inflation. We believe that the US Fed will most likely lead other major economies on the interest rate revisions, with the European Union and the Bank of England (BoE) expected to follow suit soon after. The Reserve Bank of India (RBI), meanwhile, seems steadfast in aligning the Consumer Price Index(CPI) to the targeted glide path of 4% and hence may lag behind its global peers on policy normalization. The Bank of Japan may finally look at revisiting its stance on yield curve control.‍

This brings to the fore an emerging trend of data revisions which has the potential to aid further volatility to risk assets. We had two major data revisions over the past couple of days, which when revisited, point to starkly contrasting outcomes, namely the US Non-Farm Payroll (NFP) job additions in Jan’24, which was revised downwards by 124k, while Japan’s Q4 GDP growth was revised upwards to 0.4% from -0.4% (from technical recession to expansion). The policymakers as well as market participants, thereby, will have to assess a multitude of information sets before arriving at a consensus view of the economic scenario.‍

Check our report below to gain key insights about the same