US CPI in focus

In focus today

In Norway, October CPI print is due. We expect that core inflation eased from 3.0% to 2.7% y/y (cons: 2.8 % y/y) in October, primarily due to base effects (a high monthly increase in October last year). The risk is tilted to the upside, as the Black week-effect could be underestimated.

In Denmark, October CPI inflation will be released. We expect inflation to increase slightly to 2.3% y/y, as electricity prices surged in October on the back of higher market prices and winter tariffs kicking in. It will be interesting to see if the downward trend in food prices continue.

In Sweden, the Riksbank minutes will be published. Following last week's expected rate hike, the Riksbank stressed that inflation remains low, but price pressures are expected to pick up. The minutes will be closely watched for signals on the timing of further hikes and the Riksbank's view on the krona.

In the US, we will receive the October CPI print. We expect headline CPI at 0.3% m/m SA (prior: 0.6% m/m) and Core CPI at 0.3% m/m SA (prior: 0.3% m/m). The y/y growth rate will not be published as the October CPI release last year was cancelled following the government shutdown. We expect price pressures from energy to moderate notably compared to recent months. Shelter inflation is expected to moderate again, though remain positive, after it picked up in September.

Also in the US, we will be hearing from the Fed's Waller and Bowman (both permanent voters) as well as from Logan (voter in 2026, non-voter in 2027) and Schmid (will not be voting before 2028).

Economic and market news

What happened overnight

In China, trade data for October was released. Chinese exports growth slowed down slightly to 35.2% y/y (prior: 36.3% y/y) in USD terms. Imports grew by 41.6% y/y (prior: 32.0% y/y) driven by chips imports and the rising prices in memory chips. China's January-October trade surplus reached USD 1T as the global AI infrastructure investment cycle boosts sales of high-tech products.

In Japan, the Bank of Japan (BoJ) summary of opinions from the October meeting showed some mixed signals. Some BoJ policymakers saw a need for faster rate hikes with one member saying that a hike should be delivered "without hesitation". However, others urged caution given soft domestic consumption, uncertainty over AI demand and the still-unfolding effects of earlier tightening. The BoJ kept its key interest rate level at 1.25% at the October meeting.

In geopolitics, the price of oil continues to decline after US President Donald Trump stated on Monday that he plans to hold of new military strikes against Iran for the time being. Brent crude futures are trading around the USD 91.5/bbl mark on Tuesday morning, down over 22% from the USD 118/bbl high reached on 30 October.

What happened yesterday

In the euro area, the European Sentix investor confidence indicator was broadly unchanged as expected in November at 2.4 (cons: 2.0, prior: 2.7). Confidence thereby remains around the same level as before the war in Iran following a temporary dip over the summer.

Equities: Yesterday everything related to risk went up. Global equities were 2.1% higher, S&P500 2.3%, Nasdaq 2.7% and Russell2000 gained 3.2%. In fact, it was the S&P500's best session in about 7 months, and it took US indices back to where they stood before the midterm. The move was AI narrative led, with industrials and tech at the top of the table, and focusing on the semiconductor index, SOX, it was up almost 7% yesterday. Asia followed overnight, led by Korea and Japan. US and European futures are mostly in green. This all boiled down to a growth risk on narrative.

FI and FX: It was back to "risk-on" with positive gains in the equity markets as well as a modest spread compression in e.g. German ASW-spreads as well as the OAT-Bund spread. There was a bearish flattening of the US government bond curve despite a decline in the oil price towards USD 93. This was driven by comments from Trump that it was highly unlikely that US would strike Iran again.

This morning there has been modest movements in US Treasury yields in Asian trading and the oil price declined to USD 92. Yesterday, The Dollar weakened modestly against the Euro and the yen, and both the Euro and the yen has held onto gains from yesterday in Asian trading hours.