Pound Holds on to Weekly Gain (3:29 p.m.)

(Bloomberg) -- We're wrapping up for the day now, and the pound and gilts remain slightly lower, while the FTSE 100 is pushing slightly higher.

But, as today's Spotlight Move shows, those moves are just slightly reversing the trends for the week. Gilts are up for a third week, and the pound has climbed for a fourth — the longest run since the post-Sunak rally that ended in December. Meanwhile, the FTSE is set for its first decline in 2023 after what's been an impressive start to the year.

Lessons From a Week in Davos (2:32 p.m.)

After spending the week speaking with various luminaries at the World Economic Forum in Davos, Bloomberg's Francine Lacqua and Manus Cranny recap their key takeaways. 

What Retail Sales Mean for You (1:35 p.m.)

There's no getting around it: the latest UK official retail sales figures for December were woeful. So what does it mean for the wider economy, and for your money? The key point to remember is that economies and markets are not the same things. Even if the "glass half-full" scenario doesn't come through for the economy, the market can still do well, and here's why. — John Stepek

Read More:  The Market Is Not The Economy

Merryn Talks Money (12:35 p.m.) 

If you are looking for some positive lunchtime listening then check out this week’s  Merryn Talks Money.

In it, Pictet Chief Strategist Luca Paolini tells Merryn Somerset-Webb that while there’s a lot to be negative about these days, things aren’t as bad as they seem—even in the UK. Indeed, Paolini contends most investors have become bullish about Great Britain. Listen in for more reasons to be cheerful. 

Davos Latest: Brexit Criticism and Growth Optimism (12:13 p.m.) 

Over in Davos, the World Economic Forum is drawing to a close on an optimistic note, with a number of CEOs sounding upbeat about 2023.

Still, central bankers also cautioned that the fight to get inflation back under control is far from over, while France’s finance minister Bruno Le Marie is still laying out the cost of Brexit.

UK Commercial Property Feels the Pinch (11:52 a.m.) 

It's not just the residential sector where lenders and borrowers are struggling. About 40% of UK commercial real estate lending — excluding bonds — matures by the end of next year, according to a study by Nicole Lux at Bayes Business School.

Tighter lending restrictions from lenders mean landlords may have to inject the equivalent of a quarter of the original purchase price in equity to secure refinancing, said Ian Guthrie, a senior managing director at the loan advisory team at Jones Lang LaSalle, a real estate broker.

Lux, meanwhile, is already seeing the return of loan-to-own strategies in development finance. Alternative lenders are offering mezzanine finance to borrowers with a view to taking over the project and working it out when the credit can't be repaid. There will be “some casualties” and some “fire sales,” Lux said. — Neil Callanan

Global Property’s Debt Spiral (11:43 a.m.)

The property slump extends beyond the UK, and it has left $175 billion of real estate credit distressed around the globe. 

Rising borrowing costs and higher inflation means consumers are suffering. The sharp rise in mortgage costs has caused demand from homebuyers to slump. That, combined with the current drop in house prices, will see some housing projects come under pressure as they struggle to find buyers.

All that means a reckoning is coming for credit funds that made a big push into funding development projects after home sales soared during the pandemic. — Neil Callanan

Read More:  Global Property Market Faces $175 Billion Debt Spiral

Spare Room Supply Jumps (10:57 a.m.) 

After extra spending over Christmas, January can often be a time when we get serious about our finances. For some Brits, this has meant searching for extra income in new ways, including by renting out their spare rooms.

SpareRoom said that the number of people searching for lodgers spiked in January, reaching levels not seen since the summer of 2020 when pent-up demand was unleashed by loosening Covid restrictions.

Others have turned to shorter-term solutions, like Airbnb. The company reported that four in 10 hosts say that the additional income helps them to afford their home and increasing living costs. — Helen Chandler-Wilde

Read More: Brits Are Renting Out Spare Rooms to Beat Cost of Living Crisis

More Than Half of Britain’s Home Values Slump (10:35 a.m.)

In a fresh sign of turbulence for Britain's housing market, new data shows more than half of the nation's 30 million homes fell in value in the final three months of 2022.

What's more, over one million homes wiped out the gains achieved throughout the pandemic in the second half of the year, as high borrowing costs and inflation weighed on the housing market. Almost a third of those homes were in London, according to the Zoopla report. — Damian Shepherd

Read More:  Over Half of Britain’s Homes Tumbled in Value at the End of 2022

UK Retail Sales Built on Consumer Credit (10:08 a.m.) 

Credit card activity in the UK is rising at its fastest pace since March 2004, data from the Bank of England showed, and an increasing number of pensioners are using buy-now-pay-later and retailers are reporting that many shoppers are turning to finance.

Credit is being used for buying a wide range of items from high-ticket electronic items — electronics retailer Currys reported record credit adoption in the 10 weeks to January -- to bare essentials such as milk and other groceries. Data from fintech business Revolut suggested that supermarket spending was up 7.8% in December, while more than 10,000 customers used Iceland’s micro loans in December, which let shoppers pay for food in installments.

So while improved earnings from the likes of JD Sport, Sainsbury and Next have provided some rare cheer for the economy, signs of a customer borrowing binge fueling the resurgence bring into question how long the trend can last. —  Abhinav Ramnarayan

Read More:  Credit Binge Sees UK Shoppers Use Debt to Buy TVs and Milk

All of This Week’s UK Data in Context (9:46 a.m.) 

Here's more on the glut of UK data this week, from jobs and inflation to retail sales and confidence, from Bloomberg's Lizzy Burden.

Wanted: UK Workers (9:39 a.m)

UK employers kicked off the new year by looking for a deluge of new workers, even as consumer confidence stalled.

That's Tom Rees's takeaway from a pair of overnight surveys which highlight the apparent discrepancy in the UK economy right now.

There were more than 184,000 new job advertisements in the first week of January, up by a quarter on the same period a year ago, according to the Recruitment & Employment Confederation. Meanwhile, the market research firm GfK said its measure of consumer sentiment fell 3 points to minus 45 in January, the first decline in four months.

Read More: UK Employers Step Up Hiring Despite Drop in Consumer Confidence

London Rush on Retail Sales, Keir Starmer (9:02 a.m.)

Check out the London Rush for some of the top stories out of the UK today, including more on retail sales and Labour leader Keir Starmer’s appearance in Davos. Read the newsletter or watch the video below: 

Upbeat Markets Weigh Fed Comments (8:38 a.m.)

Today’s gain in stocks across the globe comes as comments from Federal Reserve officials this week highlighted a growing debate over the future path of interest rates and whether a slowdown in the pace of hikes is warranted.

While Vice Chair Lael Brainard said on Thursday that rates need to stay high to keep inflation in check, two of her colleagues — Dallas Fed President Lorie Logan and Philadelphia Fed chief Patrick Harker — laid out the case for a downshift in tightening. 

Check out more top reads in today’s Five Things newsletter: 

• Netflix co-founder Reed Hastings steps aside as CEO
• US announces new package of military hardware for Ukraine
• The global property market faces a $175 billion debt spiral

FTSE 100 Opens Higher, Gilts Inch Lower (8:10 a.m.)

UK trading is underway now and the pound is shaking off some of the gloom it saw just after the sales numbers. Meanwhile, the FTSE 100 has had a strong open after yesterday’s decline, led by Scottish utility SSE, which increased its earnings forecast this morning off the back of soaring power prices.

The advance is also tracking a generally better tone in stocks around the world today. Gilts have opened slightly lower, following European and US peers.

Consumers Hit by Inflation and Strikes (7:55 a.m.)

Here’s the full write-up of the data from Lucy White and Tom Rees. As well as the soaring inflation hurting consumers’ spending power, they also highlight that postal strikes in the run-up to Christmas drove more customers into bricks-and-mortar stores over online shopping. According to Erin Brookes, managing director and head of retail in Europe at restructuring firm Alvarez & Marsal:

“The combination of rail and postal strikes in December provided retail with a double whammy of disruption, restricting the number of shoppers in-store and parcels reaching doorsteps in time for Christmas.” 

Read More:  UK Retail Sales Had Worst Year on Record in Spending Squeeze

Pound falls after retail data (7:30 a.m.)

The disappointing sales numbers have taken their toll on the pound, which has fallen to its lowest levels of the day. That's eating into the currency's fourth straight run of gains.

Retail sales unexpectedly slump (7:20 a.m.) 

Good morning and welcome to today’s edition of City Latest. The Office of National Statistics have just reported that UK retail sales unexpectedly dropped in December, completing the worst year on record.

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