Central bank meetings on the menu

In focus today

In Sweden, the preliminary inflation figures for October are released at 08:00 CET. We expect core inflation at 2.65% (cons: 2.6%, prior: 2.7%) and headline CPIF at 2.95% (cons: 2.9%, prior: 3.09%). Our forecasts are one and three tenths above the Riksbank's, respectively. The data should underpin the Riksbank's view that inflation is heading lower, supporting their view that the elevated inflation is temporary. Erik Thedéen and Per Jansson will comment on monetary policy in separate speeches today, at 14:00 and 16:00 CET, respectively - we expect nothing new.

In Norway, we expect Norges Bank to keep the policy rate unchanged at 4.00% at today's MPC-meeting, with signals likely pointing to an unchanged rate in December as well. This is an interim meeting without new forecasts, only a press release and a press conference.

In the UK, the Bank of England meeting is scheduled, and we expect a non-consensus 25bp Bank rate cut to 3.75%. See more in Bank of England Preview - Softer inflation opens door for more easing, 31 October.

In the US, the Challenger Report for US layoff and hiring announcements is due for release for October. While not usually a tier-1 data point, we will keep an eye on the report amid the delays to official data. 

In the euro area, data on retail sales for September are released. Retail sales have been stagnant for the past five months following increases early this year likely due to the weak consumer confidence.

In Germany, focus turns to industrial production. Industrial production showed a large and unexpected decline in August to levels seen only during the Covid pandemic and following the financial crisis.

Overnight, China releases trade data for October, which we expect to continue to show robust growth in exports. The numbers are quite volatile, though, so we could see some set-back after a decent rebound last month to 8.4% y/y. 

Economic and market news

What happened overnight

In Japan, labour cash earnings rose 1.9% y/y in September, while real wages fell 1.4% y/y, marking the ninth consecutive decline as inflation outpaced wage growth. August's real wage drop was revised to 1.7% (prior: 1.6%). Wage growth remains crucial to the BoJ's rate hike timing, with the widening wage-price gap complicating the monetary policy outlook.

What happened yesterday

In the US, the Supreme Court heard arguments on the Trump administration's use of the International Emergency Economic Powers Act (IEEPA) to justify imposing emergency tariffs. A majority of justices across ideological lines appeared sceptical of the president's authority to implement such measures. Reflecting this scepticism, prediction markets dropped from 45% before the arguments to 25% this morning on the likelihood of a full administration victory. However, the arguments were not entirely one-sided, as several conservative justices acknowledged the president's broad powers in foreign affairs.

Also in the US, the ADP National Employment Report showed private sector jobs increased by 42k in October, stronger than the early estimate of +14k and consensus of +28k, and the previous month revised up by 3k. Growth was driven by education and healthcare, trade, transportation, and utilities, while job losses persisted in professional business services, information, and leisure and hospitality. Larger firms accounted for most of the net hiring.

ISM Services index for October rose to 52.4 (cons: 50.8, prior: 50), marking the strongest expansion since February, and with all subcomponents stronger than expected.

In Sweden, the Riksbank decided to maintain the policy rate at 1.75%, as widely expected. The central bank reiterated its September Monetary Policy Report, stating that: "The policy rate is expected to remain at this level for some time to come, in line with the forecast in September." On the SEK, the Riksbank also repeated its September outlook, saying the krona is expected to strengthen "somewhat" instead of "significantly" going forward. " Read more in Riksbank review - November 2025: On hold at 1.75% as expected - repeating September message, 5 November.

In the euro area, the final services PMI was revised up to 53.0 from 52.6 in the flash release. The flash release was already higher than consensus expectations of 51.2, so we got a significant, positive surprise in October. As the manufacturing PMI confirmed the flash release the composite PMI was revised up to 52.5. The euro area economy has thus entered the final quarter of the year with a solid momentum according to the PMIs, which should strengthen the case for unchanged policy rates in the ECB.

In the EU, member states agreed to a 2040 climate goal, including a delay to the start of the emission trading system for homes and road transport (ETS2), which is dovish for the ECB. Without ETS2, 2027 inflation is likely to undershoot, with ECB estimates suggesting a 0.0-0.4pp impact on headline inflation. While the law awaits European Parliament approval, its shift towards less ambitious climate policies makes approval likely. This move offsets some hawkish growth surprises in the ECB outlook.

In Poland, the National Bank of Poland lowered its main rate by 25bp to 4.25% at its November meeting, marking the fourth consecutive cut and aligning with market expectations.

Equities: Equities bounced back after Tuesday's mysterious pullback. Top performers were the stocks that had sold off in the previous session - primarily semiconductors and AI-capex-related names, with Intel, Qualcomm, and Caterpillar all up 3-4%. Overall, the S&P 500 rose 0.4% for the day (after slipping into the close), while the Stoxx 600 gained 0.2%. Whether the immediate rebound was driven by retail buying is open to speculation. However, as we discussed yesterday, the selloff was not rooted in macro concerns or any negative AI catalyst. This was evident in unchanged bond yields and a VIX that remained comfortably below 20. The recovery is continuing in Asia this morning, while US and European futures are flat, meaning the full decline from Tuesday has yet to be recouped.

FI and FX: The Riksbank held rates unchanged as expected and the meeting turned out to be a non-event for the market with EUR/SEK holding steady. EUR/USD consolidated below 1.15 yesterday after a stronger than expected ADP jobs report pushed US rates higher. The 10Y US Treasury yield rose after the US Treasury hinted it is considering increasing coupon issuance.