Global Economy Briefing: February 4, 2026 Morning
Read about Global Economy Briefing: February 4, 2026 Morning on The Rio Times.
Key Points
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- French inflation collapsed: CPI fell to 0.3% y/y, well below expectations, reinforcing the ECB easing case.
- Asia-Pacific services PMIs surged across Japan, Australia, and China, signaling broad-based demand resilience.
- U.S. crude inventories drew down sharply (−11.1M barrels); consumer optimism improved but retail spending slowed.
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United States
\nOil markets got the headline. API reported a massive −11.1M barrel crude draw vs +0.7M expected—the largest weekly decline in months, signaling either strong demand or supply disruption.
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\nRetail spending cooled: Redbook slowed to 6.7% y/y from 7.1%. Consumer sentiment improved: IBD/TIPP Economic Optimism rose to 48.8 from 47.2, beating the 47.9 consensus—still below 50 but trending in the right direction.
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\nFed speakers Barkin and Bowman were on the tape. Net: the crude draw could support energy prices near-term; consumer data is mixed but sentiment is improving modestly.
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Europe and UK
\nFrench disinflation was the story. CPI fell to 0.3% y/y (vs 0.6% expected, 0.8% prior) with a −0.3% m/m print (vs −0.1% expected). HICP mirrored this at 0.4% y/y.
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\nThis is a meaningful undershoot and strengthens the case for continued ECB easing. French government budget deficit narrowed to −€124.7B from −€155.4B—fiscal improvement heading into year-end.
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\nFrench car registrations fell −6.6% y/y, worsening from −5.8%. Spain’s labor market weakened: unemployment rose 30.4K (vs 13.4K expected) after a −16.3K decline prior—a reversal worth watching.
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\nSpanish short-term yields eased marginally (6M 1.973%, 12M 2.028%). UK gilt yields rose: 10-year auction printed 4.585% vs 4.456% prior, reflecting persistent term premium.
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\nECB Bank Lending Survey was released; German Buba’s Balz spoke. Net: French inflation collapse is dovish for ECB; Spain’s labor softening and UK yield pressure are the offsets.
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Canada
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- No major releases.
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Asia-Pacific
\nServices PMIs surged region-wide. Japan’s composite PMI jumped to 53.1 (vs 52.8 expected, 51.1 prior) with services at 53.7.
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\nAustralia’s services PMI leapt to 56.3 (vs 56.0 expected, 51.1 prior)—a 5-point gain—with composite at 55.7. China’s Caixin services PMI beat at 52.3 (vs 52.0 expected).
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\nAustralia’s AIG indices were mixed: construction improved sharply to 5.2 from −16.9, but manufacturing deteriorated to −19.4 from −18.3. Korea’s FX reserves slipped to $425.91B from $428.05B—modest but worth monitoring given won volatility.
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\nNet: services strength across Asia supports the regional growth story; Australia’s post-RBA-cut momentum is building in services even as manufacturing struggles.
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Latin America and Africa
\nBrazil’s industrial production disappointed. Output fell −1.2% m/m (vs −0.8% expected) after −0.2% prior; y/y growth was just 0.4% (vs 1.0% expected).
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\nThe BCB released Copom minutes—markets will parse for hawkish/dovish signals. IPC-Fipe inflation eased to 0.21% m/m from 0.32%, a modest cooling.
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\nMexico’s manufacturing PMI remained deeply contractionary at 46.3, barely changed from 46.1—industrial stress persists. Colombia’s exports turned positive at +1.3% y/y after −2.7%, a welcome reversal.
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\nNet: Brazil’s industrial sector remains weak despite easing inflation; Mexico’s factory slump continues; Colombia trade is stabilizing.
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What It Means
\nThis was a “disinflation accelerates, services resilient” session. French CPI collapsing to 0.3% y/y is the most significant European data point—it reinforces ECB rate cut expectations and suggests pipeline pressures are fading faster than anticipated.
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\nAsia-Pacific services strength (Japan, Australia, China all beating) supports the soft-landing narrative and validates the RBA’s decision to cut.
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\nThe massive U.S. crude draw could push energy prices higher near-term. Brazil and Mexico remain the EM weak spots on the industrial side.
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\nTilt: Lean into European duration—French disinflation supports further ECB easing; stay long Asia-Pacific risk where services momentum is building; respect the crude draw for energy positioning; remain cautious on LATAM manufacturing exposure until PMIs stabilize above 50.
This is part of The Rio Times’ daily global economic intelligence for the Latin American financial community.
Related: Latin American Pulse | Brazil Morning Call
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