In focus this week
- In the euro area, the Eurozone’s group of finance ministers will take stock of the two candidates to succeed Lagarde as ECB President. Spaniard De Cos and Dutchman Knot were the only two candidates nominated before Friday’s deadline. The official decision will be taken by European heads of state later and could still end up being another candidate. For details, see Research Euro Area – ECB’s game of musical chairs, 25 September.
- Also in the euro area, we receive the Sentix investor confidence indicator that gives the first reading of sentiment in November.
- In the US, the Fed’s Goolsbee and Barkin (both non-voters in 2026 and voters in 2027) will be speaking.
- In China, trade data will be released overnight. We expect it to likely show continued robust exports as well as strong import growth driven by chips imports and the rising prices in memory chips.
- The week is rather quiet on data releases with the main highlight being US October CPI released on Tuesday. Equity investors will be watching tech stocks closely after last Thursday’s sell-off.
Economic and market news
What happened overnight
In China, PPI inflation in October rose to 5.7% y/y (cons: 5.4%, prior: 5.0%) as higher global oil prices raised manufacturing costs. Domestic price pressures remained weak and CPI inflation in October fell to 0.7% y/y (cons: 0.8%, prior: 0.9%).
In geopolitics, China announced that it will maintain the suspension of its additional 24% tariff on US imports for two months. The decision will take effect from next Tuesday. China will retain a tariff of 10%. The Chinese statement on the decision stated that the move is done to implement the “outcomes and consensus reached at the Washington meeting.” After the Washington meeting both sides proposed reciprocal tariff cuts covering USD 60bn of goods. However, the package has yet to be finalised.
What happened over the weekend
In geopolitics, explosions were reported in southern Iran on Saturday evening. Iranian state media suggested they could be related to domestic military activity and there was no confirmation of fresh US strikes in Iran. US President Donald Trump said on Sunday he was highly unlikely to order new attacks on Iran as long as talks to end the conflict progress. However, both US and Iran reported further incidents involving commercial vessels in or near the Strait of Hormuz during the weekend. In addition, the administrative offices of Saudi Aramco were damaged on Sunday by falling shrapnel. Houthi rebels have claimed responsibility for the strike. Brent crude futures are trading around the USD 98/bbl mark on Monday morning.
In the US, last Friday’s jobs report was strong with NFP at +165k (cons: +65k, Danske: +70k) and unemployment rate at 4.1% (cons: 4.2%, Danske: 4.1%). Employment also revised up to 60k in September from first estimate of 29k. Private payrolls revised up in September to 78k from 46k. Total revisions up +84k, as August is also revised higher. The tighter labour market supports our view for the next rate hike at the December meeting.
Equities: Global equity markets had a turbulent end to last week. On Friday, the S&P 500 closed up 0.3% and the Nasdaq 100 rose 1.1%, as technology and chip stocks bounced back, but those gains were not enough to offset a brutal Thursday session. For the week as a whole, the S&P 500 fell 2.7%, its largest weekly decline since April 2025, with Nasdaq down 3.4%. Equity markets didn’t really take note of the US labour market report on Friday. Global equity markets have entered this week in a tentative recovery mode.
FI and FX: Global bond yields remained steady on Friday despite the stronger than expected US labour market data for October. The main driver for the global bond market going forward is expected to be the oil price and jitters in the AI market. If the conflict in the Middle East deescalates, then rates are expected to decline short-term. This morning there has been a very modest rise in bond yields in Asian trading hours. The oil price has been stable at USD 98 this morning. The dollar bounced back on Friday after a period with a decline versus the Euro and JPY and trading around the 111 to 112 versus the Euro and 158-level versus the JPY. Both crosses have been trading in a tight range this morning around the 111.5- and 158.4-level, respectively.
