In focus today
In the euro area, the flash consumer confidence indicator for October is released, which is expected to show a small decline following the recent rise in energy costs.
In Denmark, the October consumer confidence will be released. We expect a decline as higher energy prices, particularly electricity prices, provide a fresh negative impulse to sentiment.
In Japan, CPI data for September will be released overnight. Core price pressures have shown signs of picking up recently which was markedly reflected in the Tokyo data published earlier this month. Inflationary pressures are starting to put more pressure on Bank of Japan (BoJ) to hike rates again. PMIs will also be released overnight. So far, the economic recovery has been resilient to higher energy prices, not least due to price caps. A solid growth picture points towards another BoJ rate hike in December, as we see it.
Economic and market news
What happened yesterday
In the UK, September CPI inflation rose to 3.5% y/y from 3.1%, core inflation to 2.8% from 2.6% and services inflation to 3.7% from 3.4%. Slightly higher than consensus and above the Bank of England’s (BoE) forecast. We are adjusting our BoE forecast to include a rate hike in November, as inflation concerns have risen and growth has strengthened. Activity has proven more resilient than expected in recent months and the labour market is showing signs of stabilisation. We believe the BoE will act to contain inflation risks and prioritise the credibility of its inflation target. Read the newly published Yield Outlook here: Yield Outlook – Lower EUR rates despite French debt woes, 21 October.
In geopolitics, Russia’s agreement to resume US-mediated talks with Ukraine marks a tactical opening in the war, but not yet a path to peace. The proposed three-way talks between Russia, Ukraine and the United States could restart after 10 November and focus on future security guarantees, as reported in Reuters. Moscow’s release of retired US teacher Stephen Hubbard alongside offers to help Washington on Iran and fertiliser supplies looks aimed at widening the agenda and improving ties with the Trump administration. Still, Russia and Ukraine remain far apart on the terms of any settlement. A possible meeting in China between Trump, Putin and Xi would also risk shifting the Ukraine conflict further into a broader great-power negotiation. Brent oil climbed above USD110/bbl again this morning due to heightened concerns over further disruptions to energy supplies in the Middle East and Russia.
Equities: Wednesday was ultimately a constructive session for equities rising 0.7%, with the S&P 500 up 0.6% and Nasdaq gaining 1.1%. The overnight earnings picture, however, has been less convincing to markets. Meta raised its spending outlook and announced new AI initiatives, while Tesla moved in the opposite direction, lowering its 2026 capex target to USD20bn from above USD25bn. The two stocks also moved in opposite directions in post-market trading. So, while Meta shares gained after hours, the broader signal from big tech was not strong enough to keep the AI momentum going. Nasdaq futures are down 1.2% this morning and S&P 500 futures are down 0.6%, while the Kospi is also trading lower.
FI and FX: Another day, another new low in EUR/NOK. The decline in the pair is driven by the combination of high energy prices and EUR-pessimism on the back of French debt worries. EUR/USD held steady yesterday – the pair almost looks to be in a wait-and-see mode ahead of the upcoming eventful weeks with big central bank decisions, US midterm elections and key data releases. US and German yield curves bear flattened yesterday amid rising equity markets.
