Flash PMIs take center stage

In focus today

In the euro area, September flash PMIs are released and will be closely watched for the ECB outlook. We expect the release to confirm that decent growth momentum continued in September. We forecast the manufacturing index to rise to 53.3 from 52.7, supported by rising orders and a rebound in global activity. Services activity is likely to edge lower to 51.4 from 51.6 as consumers remain cautious but should still point to continued growth. The price indices will also be important for assessing whether higher energy costs are feeding through.

September flash PMIs are also released in the UK and are expected to remain broadly unchanged. Activity has held up well over the summer, with the August composite PMI at 52.5, the highest since April. Manufacturing has been drifting lower, while services have recovered and are now the key driver of expansion.

In the US, September flash PMIs are expected to remain solidly above the 50 level, with manufacturing at 53.6 and services at 56.0. Both indices looked strong in August, suggesting that US activity continues to hold up well.

Economic and market news

What happened overnight

In commodities, Brent crude is trading around USD 98/bbl this morning, a sixth consecutive session of declines, as Saudi Arabia is in the process of restarting its East-West pipeline. President Trump used his UN speech to warn that he could "annihilate the Islamic Republic" if no deal is reached and said a peace agreement is unlikely before the November mid-terms. Away from the rhetoric, however, US and Iranian officials held their first talks since June through mediators on the sidelines of the assembly. While no agreement was reached, both sides expect further discussions. Tehran said it would be prepared to reopen the Strait of Hormuz within seven days if the US lifts its blockade on Iranian ports. For now, the comments point to limited prospects of traffic through the Strait of Hormuz normalising.

What happened yesterday

In the euro area, consumer confidence fell more than expected in September to -16.5 (cons: -16.0, prior: -15.5). The decline follows four consecutive months of improvement and was likely driven by the recent rise in energy costs. Weaker confidence should weigh on private consumption in the near term, although the link between sentiment and actual spending has been less clear recently. Notably, consumption surprised to the upside in Q2 despite higher energy costs and falling confidence.

In geopolitics, the US, Denmark and Greenland signed a new Arctic security agreement at the UN General Assembly in New York. The agreement allows the US to expand its military presence in Greenland, including two major new sites at Narsarsuaq and Mestersvig, an expansion of the existing Pituffik Space Base and the possible deployment of a "Golden Dome" missile defence system. It also bars non-NATO states from establishing military installations in Greenland and restricts sensitive foreign investment in areas such as critical infrastructure and resource extraction. The agreement will continue to apply if Greenland becomes independent, provided it remains in NATO. Following a long period with high tensions between the three partners, the agreement should give comfort to NATO and its members.

In the US, ADP's latest weekly private employment growth estimate came in at 20.0k. This is a 4W rolling average until 5 September, up from a revised 16.75k last week. At face value, it suggests that the labour market is heating up, with employment growth momentum picking up further.

In Hungary, the central bank kept its policy rate unchanged at 5.50% as expected, pausing its easing cycle after three consecutive 25bp cuts. It also lowered its inflation target to 2.5% from 3% from 2028, saying the move supports meeting the requirements for euro adoption.

Equities: Global risk sentiment had an interesting session yesterday. What initially looked like a pure risk-on following the decline in oil prices, ended with a much more divided picture. Global equities ended just 0.1% higher with S&P500 flat amid 49.5% of the equity names up on the day. Nasdaq and Russell2000 on the other hand rose 0.5%. Overnight, Asian equities are in mixed while US and European futures point to a modest positive opening.

FI and FX: After some intraday volatility, Treasuries ended virtually unchanged on Tuesday. European rates had a volatile session on Tuesday, ultimately closing slightly higher across the board in a bear-flattening move. Oil was the dominant intraday driver. Brent dipped to around USD99/bbl - its fifth consecutive day of declines and the longest losing streak since August 2025, as Saudi Arabia moved to restart the East-West pipeline and the US flagged progress in Iran talks. EUR FX was on a weak footing yesterday despite the downtick in both crude oil and natural gas prices. EUR/USD declined close to 1.1450, while cyclicals NZD and NOK were the strongest G10 currencies of the session. EUR/SEK closed near 11.30, USD/SEK around 9.87 and NOK/SEK slightly above 1.04.