The Markit PMI service index in September rose to 51.9 from 51.0 in August

Market movers today

• Both ECB president Mario Draghi and Fed chair Janet Yellen are scheduled to speak today but we do not expect any major news from them. The Fed speeches by Bullard, Evans and Mester are more interesting due to the divided FOMC at last week’s meeting.

• The most important data release today will be the US preliminary durable goods order for August. We have not seen shipments of core capital goods bottoming out yet, suggesting that actual investments are still weak. Still, it was encouraging that new orders rose in July. Our view is that business investments were also weak in Q3 16.

• In Norway, today brings retail sales for August. We expect a correction after two weak months, see page 2. In Sweden, consumer and manufacturing confidence surveys are due.

Selected market news

Yesterday, we got some mixed data from the US. The Markit PMI service index in September rose to 51.9 from 51.0 in August. Despite the increase, the composite index suggests that US GDP only grew around 1% q/q AR in Q3. If true, economic growth has been around 1% q/q AR for four consecutive quarters, which is weak by US standards. Based on the PMIs, economic growth has not picked up as stated in the statement from last week’s FOMC meeting, and thus we stick to our non-consensus view that the Fed will not hike this year. Despite weak growth, we do not believe the economy is heading for a recession as consumers are still upbeat. Conference board consumer confidence rose to 104.1 in September from 101.8, the highest level post crisis. The Richmond index rose slightly to -8 in September from -11, so overall the regional survey does not signal a rebound in ISM manufacturing and it cannot be ruled out that ISM has stayed below 50 in September.

US equities ended higher yesterday, driven partly by the high consumer confidence, but the Asian equity indices are flashing red this morning. S&P500 futures are down 0.2%. Brent oil trades slightly above USD46 per barrel as the OPEC discussions continue.

Focus is still on the European banking sector after Deutsche Bank’s stock price plunged following the US decision to issue the bank an USD14bn fine. The European bank sector has attracted a lot of attention this year as profitability has come under pressure due to a combination of tougher regulation, negative interest rates and slow economic growth. Angela Merkel continues to rule out state aid to Deutsche Bank.

Yesterday, we also published the 2016 edition of the Danish Covered Bond Handbook. The Danish Covered Bond Handbook is intended to act as a quick reference guide to the Danish covered bonds market and provide an overview of the different bond types and issuers of Danish covered bonds in Denmark. Further, we describe the Danish mortgage credit market and its passthrough bonds, including a description of the security underlying the bonds.

Download The Full Daily FX Market Commentary