Government shutdown postpones US jobs data

In focus today

The US Bureau of Labor Statistics (BLS) announced yesterday that the ongoing partial government shutdown will cause a delay to Friday's January Jobs Report release. This also affects the annual NFP benchmark revisions that were due for release on Friday, as well as the December JOLTs data, that was supposed to be released today. The delay will likely end up being short, only a few days, as the House of Representatives is expected to pass the shutdown-ending funding package today. The BLS will inform markets about the new release dates after the funding has been approved.

The January flash inflation data from France is released today and expected to decline to 0.6% y/y from 0.7% y/y. Both Spain and Germany recorded upward surprises last week, so there is an upside risk to the consensus expectations. 

Economic and market news

What happened overnight

In Australia, the Reserve Bank of Australia's policy rate decision resulted in a hike by 25bp to 3.85% in line with our expectations. The hike is the first since November 2023 and a response to increased inflation in the second half of 2025 due to a tight labour market and increased service costs.

What happened yesterday

In the US, there was a big surprise in the ISM manufacturing figures reaching 57.1 in January (December: 47.4), primarily driven by new orders. In general, there seems to be a clear improvement in final demand with increased orders, both domestic and export, growing production, rising imports and higher employment.

Yesterday, President Trump also announced that effective immediately the US cuts India's reciprocal tariff rate from 25% to 18%, resulting in a tariff rate largely in line with neighbouring countries' rates. In addition, there were talks to remove the additional 25% secondary tariff that India has been subject to, due to India's purchases of Russian oil. In return, Trump expects India to reduce trade barriers and purchase oil from the US rather than Russia.

In France, Prime minister Lecornu survived a no-confidence vote on Monday, resulting in the adaptation of the delayed deficit-cutting 2026 budget. The budget aims to reduce the deficit to around 5% of GDP in 2026, as well as boosting military spending. The pension reform raising retirement age has been postponed for now.

In the euro area, the final manufacturing PMI data for January was released at 49.5 (December: 48.8), broadly in line with the flash estimate of 49.4. Among others, the improvement is a result of output returning to growth after declining in December. The data points to a broadly stable euro area manufacturing sector at the beginning of 2026.

In Sweden, the manufacturing PMI increased to 56 in January (December: 55.3), driven by an increase in new orders and employment. The index for input prices has risen for eight consecutive months, reaching 58.4 in January (December: 57.4). PMI prices are not a very good indicator of inflation, but it is the first time in over three years that the index is above its historical average (57.6).

In the UK, the final manufacturing PMI increased to 51.8 in January (December: 50.6), up from the flash estimate of 51.6. The release indicates the quickest pace of expansion since August 2024.

Equities: Global equities were overall on a stronger footing yesterday rising 0.2%. European equities started the day lower, but after the initial setback it was essentially a one-way streak higher through the day to end the day 1% higher. US equities ended its increase around European close, leaving the S&P500 0.5% higher, Nasdaq 0.6% and Russell 2000 1% higher, thus with a small cap outperformance. Overnight, Asian equities are higher as well as US futures this morning.

FI and FX: Despite a substantial selloff in precious metals over the last week, the global bond markets have been relatively stable. However, Treasury yields edged higher yesterday after solid US data with UST1y trading at 4.28%. The USD continued to strengthen yesterday and after a brief visit below 1,18 EUR/USD starts this morning just above. USD/JPY mostly sideways around 155.50. A notable rise in AUD/USD to above 0.70 after RBA raised rates to 3.85%, a hawkish hike. EUR/SEK sits at 10.56 and EUR/NOK at 11.43.