France will report industrial production for July

Market movers today

• With a very light data calendar again today, focus will be on the sustainability of the ceasefire in eastern Ukraine and polls on the Scottish independence vote in the UK.

• In the euro area, France will report industrial production for July. We expect a slight decline in July, largely reflecting a payback on solid industrial production in June. However, markedly stronger-than-expected industrial production in Germany in July suggests there could be some upside risk to French industrial production.

• A number of central bankers will be speaking. ECB’s Ewald Nowotny and Yves Mersch will be speaking at 13:45 CET and 17:00 CET, respectively. Bank of England Governor Mark Carney and Deputy Governor Nemat Shafik will give evidence on the August inflation report to the Treasury Select Committee at 15:45 CET.

• In Scandinavia, it is all about inflation today with actual data from Denmark and Norway and the Prospera survey in Sweden . For more on Scandi markets see page 2.

Selected market news

Selling pressure continued in US rates. Yesterday saw 2-year yields rising to 0.56%, just 2bp shy of the late-July high. In the absence of any major US market movers, it seemed that an economic letter released by the San Francisco Fed (link) on Monday contributed to the selling pressure. Basically, the letter highlights that market pricing and public expectations of the Fed are below the FOMC expectations mirrored by the dot plots. However, the letter has likely served as a timely reminder ahead of the September 16-17 FOMC meeting that Fed tightening is moving closer, notwithstanding the latest soft labour market report. Also helping lift US yields, the NFIB index of small business optimism edged higher yesterday, to 96.1 (survey 95.7).

Risk appetite retreated further yesterday, despite the absence of specific news to move the market. The S&P500 index posted another record close for the year on Friday but this week trading has been less optimistic and the index is now back to the lowest level in more than two weeks.

European fixed income markets in modest but broad-based sell-off. Yields were slightly higher in both core and non-core segments of the European fixed income markets yesterday. Notably, Spain widened 11bp in the 10-year segment, which was likely driven by worries over the potential fallout from the Scottish push for independence. A vote in favour of independence could serve as a springboard for Catalonia, as underlined by comments from Mas, the region’s president. The most recent poll has shown the outcome of the 18 September referendum balancing on a knife’s edge, see The Telegraph.