Trump says US will not attack Iran before mid-term elections

In focus today

• We expect core inflation in Norway to rise moderately from 3.0% y/y to 3.1% y/y in September, partly reflecting base effects from unusually low price growth in September last year. If our estimate is correct, core inflation would be 0.2pp above Norges Bank's estimate from MPR 2/26, which could lift rate expectations somewhat.
• From the US, consumer confidence from University of Michigan is due for release. In September, consumer confidence fell to 48.1, marking one of the weakest readings on record since the series began in the 1950s, with only May 2026 showing a more negative assessment of the economy.
• In Sweden, the monthly GDP indicator and Production Value Index are released. Both were softer in July, with GDP at -0.8% m/m, industrial production down 3.6% m/m and services up 1.8% m/m. As we expect continued solid growth for the rest of the year, a positive August GDP reading looks likely, with consensus at +0.5% m/m.
• On the wires, ECB's Isabel Schnabel is scheduled to speak.

Economic and market news

What happened overnight

In commodities, Brent crude briefly topped USD 105/bbl yesterday, reaching its highest level in almost a month, before easing to around USD 103/bbl overnight after President Trump said the US would not attack Iran before the midterm elections. Reports that China is set to resume refined fuel exports in October also helped ease the fuel market. The initial move higher was a reaction to the sharp drop in Strait of Hormuz traffic following last week's record number of tanker attacks, alongside concerns over potential production disruptions in the US Gulf Coast as Hurricane Isaias approaches.

What happened yesterday

In the euro area, the September ECB minutes offered little forward guidance, but we view them as dovish relative to market pricing. The policy discussion appeared broadly neutral and, in our view does not support the three additional hikes priced in. Members noted no signs of second-round effects from the energy shock and only limited indirect effects, while stressing that higher long-term rates could materially weigh on growth and inflation. As a result, the sharp rise in longer-term yields should limit the need for further ECB tightening.

In the US, continued claims increased more than expected to 1.716m in the week ending 26 September, up from 1.699m previously. However, the increase does not change the broader picture, as continued claims remain low compared with recent years. Initial jobless claims fell slightly, against expectations of a small increase, although the previous week was revised higher. Overall, the data still points to a relatively tight labour market.

On the wires in the US, Fed's Waller said further rate hikes are needed but stressed flexibility on the pace, adding that hikes do not need to come at consecutive meetings. While this is somewhat more explicit on the need for additional tightening than comments from Jefferson and Williams last week, it remains consistent with the message that there is no urgency to hike again at the October meeting.

Equities: Equities were somewhat lower for a second session in a row. However, breadth was positive, with equal-weight S&P500 outperforming the official index by more than 1pp. Instead, it was semis and memory giving back gains following underwhelming sales guidance from OpenAI and Samsung Electronics. Tech sold off ~2% as a result, and Asian markets underperformed. Although most sectors were higher, it was not a risk-on session. Defensives led the market, with consumer staples and energy among the top performers. Futures are higher again this morning.

FI and FX: There was a solid decline in the US yields yesterday on the back of another solid US Treasury auction. This time the 30Y bonds were sold and rounded off a week with solid demand for US Treasuries given the high level for yields. France continue to be in the spotlight, but the pressure eased a bit.

In the currency market the euro is trading around the 1.12-level versus the dollar, while the yen is trading at the 158-level. The oil price declines as Trump said the US would not attack Iran before the mid-term elections. Brent is trading at the 102-103 level this morning after having been as high as USD 106 yesterday.