Data revision

A reclassification of how cases of the coronavirus are counted led to a jump of almost 15,000 in China. The total number there is almost 60,000, with the total death toll at 1,367. The two most senior Communist Party officials in the region hardest hit by the outbreak were replaced as authorities try to ease mounting domestic anger. There was also a shakeup in the Chinese agency that oversees Hong Kong with Xia Baolong, a close ally of President Xi Jinping, newly appointed.

Costs mounting

Evidence of the economic costs of the outbreak in China is mounting. This morning the International Energy Agency forecast the first drop in over a decade in global demand for oil this quarter. The list of companies cutting guidance due to the virus continues to grow, with tiremaker Michelin SCA and drinks giant Pernod Ricard SA among the latest to lower outlooks. The European Commission this morning singled out the crisis as a “key downside risk” to its growth forecast for the year.

Tipping the balance

Federal Reserve Chairman Jerome Powell finished his testimony to Congress yesterday with a call for more support from fiscal policy in case there is a downturn in the economy. Today, it is the turn of two of President Donald Trump’s nominees for the Fed board to face lawmakers. The approval of the selection of Christopher Waller, a long-time Fed economist, seems almost certain, while that of Judy Shelton, who has questioned why the Federal Reserve even needs to exist, is looking like a much closer-run thing. Should both be approved, economists would see it as a shift of the board to a move dovish stance.

Markets slip

The high numbers of new cases and deaths announced in China have put pressure on global equities. Overnight the MSCI Asia Pacific Index slipped 0.1% while Japan’s Topix index closed 0.3% lower. In Europe, the Stoxx 600 Index was down 0.9% at 5:50 a.m. Eastern Time with all but one industry sector trading lower. S&P 500 futures pointed to a drop at the open, the 10-year Treasury yield was at 1.582% and gold was higher.

Coming up…

U.S. headline inflation data is expected to show a pickup to 2.4% in January, with core slipping slightly to 2.2% when the numbers are published at 8:30 a.m. Weekly initial jobless claims are also released at that time. As well as the nomination hearings in Washington, Fed watchers will be keeping an eye out for speeches from Dallas Fed President Robert Kaplan and New York Fed President John Williams later. Alibaba Group Holding Ltd., Nvidia Corp. and Kraft Heinz Co. are among the companies reporting results.