Eyes on EA, UK, and US PMIs

In focus today

Focus turns to the highly important September flash PMI indicator for the euro area (EA), the UK, and the US. For the EA, manufacturing has continued to improve lately while the services sector has softened. We expect this development to have continued in September with EA manufacturing PMIs rising slightly to 50.9, while services are likely to have declined marginally to 50.2. Following better-than-expected growth in the first half of the year, we expect the EA economy to be close to stagnant in the second half of the year with 0.1% q/q growth in both Q3 and Q4. This is in line with PMIs just marginally above the 50-mark.

In Sweden, the Riksbank is set to announce its rate decision. We expect an unchanged policy rate at 2.00%, but that they keep the door open for further easing, aligning with our expectations of a 25bp rate cut to 1.75% in November.

Economic and market news

What happened overnight

France, Luxembourg, Malta, Belgium, and Monaco officially recognised Palestine as a state during a high-level UN event in New York. This adds to the growing list of countries advocating for a two-state solution amidst the ongoing Gaza conflict, despite strong objections from Israel and the US.

What happened yesterday

In the US, White House officials announced progress on the deal to divest TikTok's US operations from its Chinese owner, ByteDance, which will retain less than 20% ownership. The new entity will include investors such as Oracle and Silver Lake, with Oracle managing all US user data on domestic cloud infrastructure. President Trump is expected to certify the deal with an executive order, granting a 120-day enforcement pause to finalise the agreement. While US officials are confident China has approved the deal, Beijing has yet to confirm its position.

A US federal judge ruled in favour of Ørsted, allowing the USD 5bn Revolution Wind project off Rhode Island to resume after a month-long halt ordered by the Trump administration. The court called the halt "arbitrary and capricious," boosting Ørsted's US shares by nearly 9%.

US Treasury Secretary Scott Bessent announced plans for "large and forceful" support for Argentina, including options like swap lines and currency purchases. Actions will follow today's meeting between President Trump and Argentina's President Milei.

Trump's new USD 100,000 H-1B visa fee drew backlash from the tech industry, with critics warning it could hurt start-ups, reduce talent inflow, and weaken US productivity. Some executives, however, praised the focus on high-value roles, while others predicted firms may shift hiring abroad.

In the euro area, consumer confidence rose as expected in September to -14.9 (cons: -15.0) from -15.5. The weak consumer confidence should dampen growth in private consumption, but we do still expect a gradual normalisation in confidence due to real income gains and lower borrowing costs. These factors should also contribute to a modest rise in private consumption the coming year.

In Denmark, consumer confidence continued its decline to -18.7 (prior: -17.2), driven by concerns over personal finances and food price increases despite overall inflation being under control. This contrasts with positive economic indicators like job growth, rising wages, and a strong housing market.

In geopolitics, Russian President Putin proposed a one-year extension of the New START treaty, which limits US and Russian nuclear arsenals, citing global non-proliferation interests. The offer, conditional on US reciprocity, comes amid heightened tensions over Ukraine and as the treaty's expiration in February 2026 approaches.

Equities: US equities were slightly higher on the day, while non-US equities were mixed during a session with little new data. The S&P500 rose 0.4%, while Nasdaq was up 0.7%. European indices were marginally lower at around -0.3%. European consumer confidence was slightly higher than in previous months but remains gloomy, especially in a historical context, as it has yet to recover from the 2022 inflation fallout. That said, the employment expectations were slightly higher in August relative to July, thus pointing to lower unemployment rates.

FI and FX: The US Treasury curve continues its modest selloff with yields edging slightly higher ahead of tonight's speech by Jerome Powell and Friday's important PCE data. EUR/USD found support at 1.1730 and is now back close to 1.18. Small moves with G10 FX overnight, though. Today, the Scandi market is all about Riksbank's rate decision and communication where the money market is pricing in 9bp of cuts. We expect them to stay on hold, which should lend some temporary support to the SEK.