Global Economy Briefing: January 21, 2026

Key Points

\n

\n \t
• UK inflation re-accelerated to 3.4% y/y, complicating the case for fast rate cuts.

\n \t

• U.S. housing data split: mortgage demand surged, but pending home sales plunged 9.3%.

\n \t

• Asia diverged: Korea’s GDP contracted and Japan’s trade surplus shrank, while Australia’s jobs beat.

\n

\n

United States

\nHousing sent mixed signals. Mortgage rates eased to 6.16% and applications jumped 14.1%, with purchases up (index 194.1) and refis up (1,580.8).
\n
\nYet pending home sales fell 9.3% in December and the index dropped to 71.8. Construction spending rebounded in October (+0.5%) after a September drop (−0.6%). Redbook slowed to 5.5% y/y. GDPNow rose to 5.4%. Energy inventories built again (API crude +3.04M).
\n
\nTreasury duration stayed firm: the 20-year auction cleared at 4.846%. Read-through: credit demand is alive, but housing transactions are rolling over as the market absorbs higher rates.
\n
\n

Europe and UK

\nThe UK’s inflation picture turned less comfortable. CPI rose to 3.4% y/y, with core holding 3.2% y/y; both rose 0.4% m/m and 0.3% m/m, respectively. RPI climbed to 4.2% y/y.
\n
\nInput PPI eased (−0.2% m/m; 0.8% y/y), and core output PPI softened to 3.2% y/y with a −0.1% m/m print. House prices rose 2.5% y/y and the 5-year gilt auction eased to 3.821%.
\n
\nCBI orders improved slightly to −30. Net: inflation is stickier than hoped, so the BoE’s easing path stays cautious even as pipeline costs cool.
\n
\nOn the continent, ECB communication dominated. No new euro headline inflation print was in this dataset, but policy messaging remained “patient.” France and Germany rates stayed in view through speeches rather than fresh numbers.
\n

Canada

\nProducer prices cooled sharply. IPPI fell −0.6% m/m and slowed to 4.9% y/y. RMPI rose 0.5% m/m but eased to 6.4% y/y. That points to easing pipeline pressure into Q1.
\n

Asia-Pacific

\nKorea surprised on the downside. Q4 GDP fell −0.3% q/q and slowed to 1.5% y/y, a clear loss of momentum. Japan’s external position weakened: exports rose 5.1% y/y but imports rose 5.3%, shrinking the trade surplus to ¥105.7B from ¥316.7B.
\n
\nForeigners sold Japanese bonds (−¥361.4B) while still buying stocks (+¥874.0B), a risk-on tilt inside Japan. Australia was the bright spot: employment rose 65.2k, full-time up 54.8k, unemployment fell to 4.1%, and participation held 66.7%.
\n
\nNet: Asia is not moving in one direction—Australia is firm, Korea is slowing, and Japan is importing more.
\n

Latin America and Africa

\nMexico’s consumer improved: retail sales rose 1.0% m/m and 4.4% y/y. Brazil’s FX flows flipped positive to +$2.215B after recent outflows, a stabilizing sign for local assets.
\n
\nArgentina’s activity fell −0.3% y/y, a weak demand signal. South Africa’s inflation held 3.6% y/y with retail sales up 3.5% y/y, suggesting consumption is still supporting growth.
\n

What it means

\nThe global picture is “disinflation, but not everywhere.” The UK’s higher CPI slows the BoE’s pivot and keeps European rates higher for longer at the margin. U.S. housing is splitting between financing demand and weaker transactions, a typical late-cycle pattern.
\n
\nIn Asia, Korea’s contraction is the clearest warning, while Australia’s jobs strength offers balance. Mexico and Brazil look steadier, with Brazil’s flows easing a key risk.
\n
\nTilt: keep quality duration; prefer U.S. services over rate-sensitive housing plays; stay selective in the UK until inflation cools; favor Australia over Korea in Asia; in LATAM, prefer Mexico demand and Brazil carry while flows stay positive.

This is part of The Rio Times’ daily global economic intelligence for the Latin American financial community.

Related: Latin American Pulse | Brazil Morning Call

LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.