Taking the temperature on Euro area credit growth

In focus today

In the euro area, focus turns to data on credit growth for October. Loan growth to non-financial corporations increased to 2.1% y/y in September but the momentum has lowered recently in a signal of a smaller boost to economic activity.

In Denmark, retail sales for October are released. Our Spending Monitor showed a 0.6% m/m decline in real retail spending in October. We expect the figures from Statistics Denmark to reflect the same trend in October.

In Sweden we have the NIER release, where confidence indicators and price plans will be important for evaluating the economic recovery in Sweden. We anticipate a gradual improvement in today's data. Aside from the growth indicators, we will also pay attention to firms' pricing and employment plans.

Half an hour later, the Swedish National Debt Office will present an updated forecast and borrowing plan, where we expect an upward revision of the borrowing requirement by SEK 70-80bn for next year.

Overnight, a big batch of Japanese data is released. We highlight the November Tokyo inflation and October retail sales. Price pressures have increased again recently as inflation hovers around 3%, although for the wrong reasons. High food prices and a weak yen is driving inflation instead of consumer demand. 

Economic and market news

What happened overnight

In China, industrial profit growth for October dipped into the red with a reading of -5.5% y/y. The reading followed strong gains in the late summer with +21.6% y/y in September. The decline was due to low domestic demand and exports, which were hit by US tariff threats.

What happened yesterday

In the UK, the Autumn Budget was announced. In a surprise turn of events, the Office for Budget Responsibility (OBR) report was leaked before Chancellor Reeves could present the budget. The budget raised tax rates to post war highs, with the Chancellor asking "ordinary people to pay a little bit more". A GBP22bn fiscal headroom provides a bigger buffer against future excess debt issuance than consensus expectations for GBP15bn and the budget delivered less near-term fiscal tightening than expected. The GBP strengthened on the release. The absence of VAT hikes paves the way for more near-term easing from the BoE, and markets are now pricing above 90% chance of an interest rate cut at the BoE December meeting.

In Norway, mainland GDP up 0.1% q/q in Q3 (cons: 0.2%). The details were mixed after the strong pick-up in H1, with continued solid growth in private consumption and mainland exports. Meanwhile, residential investments were flat, mainland investments were down, oil-investments and public demand were also down. Hence, growth is somewhat lower than Norges Bank's estimate from the September MPR of 0.4%, which in isolation should contribute to a downward adjustment of the rate path at the December meeting. The figures are far from weak enough to trigger a December cut but could open the door for a cut in March.  

Equities: Equities rose for a fourth consecutive session on Wednesday. The S&P 500 gained 0.7% and Stoxx 600 advanced 1.1%. This was not a classic "risk-on" session, as gains were evenly distributed across both cyclical and defensive sectors. Instead, it appeared as a broad catch-up session, with most sectors moving higher and an unusual mix of materials, utilities, and technology leading the advance. Within tech, the "Google competition" trade reversed, with recent AI laggards (Nvidia, Oracle) outperforming recent winners (Alphabet).

Implied market volatility has already concluded that the selloff is over, with the VIX sliding again yesterday, approaching its 10-year median. Equity market has a little more to go with S&P 500 roughly 1% below the peak, Nordic markets 2% below while Europe is only decimals away from October highs.

FI and FX: The USD weakened modestly overnight vs rest of G10 with EUR/USD at the 1.16 mark and equities continued their advance, seemingly driven by Fed cut expectations. Fed futures continue to price in a c. 80% probability for a December cut. US10y dropped below 4.0% for the first time since late October. MSCI ACWI rose for the fifth straight session. Tech stocks led the rally in the US where SPX rose 0.7% ahead of Thanksgiving. Asia is in green, and futures indicates a positive opening today. EUR/SEK and EUR/NOK remain stable around 11.00 and 11.80, respectively. Today, the SNDO presents an updated forecast and borrowing plan for 2026-2027.