The Davy Digest - 19th January 2026

US equities finished the week marginally lower as earnings season kicked off with several big banks reporting results, and market reactions were mixed. US inflation came in as expected at 2.7% for December, providing relief to investors. Food and rent were the main drivers of the price increases. Markets continue to expect two more rate cuts in the US in 2026 as inflation is contained and labour markets show some signs of weakness. In Europe, German inflation eased to 1.8% in December from 2.3% in November, aided by lower energy costs. There was positive news in the UK as official figures showed that Britain's economy grew more strongly than expected in November, boosted by an increase in car production and services. Finally, in Japan, producer prices rose by 2.4% in December, in line with expectations.

Last week's highlights

	December CPI (13/01) - Headline inflation came in at 2.7% as expected. Food and rent were the main drivers. Industrial Production (16/01) – Rose 0.4% month-on-month, beating forecasts.
	German Inflation (09/01) – Eased to 1.8% in December from 2.3% in November, aided by lower energy costs.
	November Industrial Production (15/01) – Rose by 1.1% month-on-month in November 2025, beating market expectations of a 0.1% increase.  UK GDP (15/01) - Britain's economy grew more strongly than expected in November, boosted by an increase in car production and services.
	Japan Producer Price Index (14/01) – Rose by 2.4% in December, in line with expectations.

Looking ahead to this week, earnings season will continue with Johnson & Johnson, Netflix & Visa among the companies reporting. In the US, the Fed’s preferred inflation measure, Core PCE, will be released on Thursday, followed by consumer sentiment data from the University of Michigan on Friday. In Europe, December inflation figures are due out on Monday, while the HCOB Eurozone manufacturing and services PMIs will be published Friday. UK investors will receive inflation data on Wednesday and retail sales on Friday. Elsewhere, China’s Q4 GDP report is scheduled for Monday. On the monetary policy front, the Bank of Japan will meet on Friday, with no change in interest rates expected.

What's on the radar

	US Core PCE Price Index (22/01) Michigan Consumer Sentiment (23/01)
	Eurozone CPI December (19/01) HCOB Eurozone Composite PMI (23/01)
	UK CPI December (21/01) UK Retail Sales December (23/01)
	China Q4 GDP (19/01) Bank of Japan meeting (23/01)

Chart of the moment - Cheaper by the gallon

Source: Bloomberg as of 13/01/2026. The chart shows average US gasoline prices in dollars/gallon.  

• The average US gasoline price has fallen significantly over the last few months, providing relief to US consumers at the pump.
• Falling gas prices have helped to keep US inflation under control, with December inflation coming at 2.7%, in line with forecasts. 
• The Trump Administration will be determined to keep fuel prices low as inflation remains a key issue heading into November’s midterm elections.

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