US employment cost data in focus

In focus today

• From the US, NFIB's January small business optimism index, December retail sales and Q4 employment cost index are all due for release today. From the Fed's perspective, the latter carries the most weight; leading data has signalled cooling wage growth towards the end of 2025. Retail sales data provides further insight into the strength of the US consumer. And finally, the NFIB has so far signalled improving confidence in stronger business conditions after last year's elevated uncertainty.
• In Denmark, January inflation data is due today, a month that typically brings extra uncertainty due to annual price adjustments, clothing sales and higher food prices following December discounts. With the electricity fee almost eliminated, we expect inflation to drop to 1.0% y/y (Dec: 1.9%), despite a rise in spot electricity prices. However, these factors add further uncertainty to the estimate.
• In Norway, we expect that core inflation in January was somewhat lower than last year, driven by lower price growth in domestic-produced goods and food. We expect a figure of 2.9% y/y in line with Norges Bank's estimate from the December MPR, but uncertainty is greater than usual in January. This is partly due to the change in consumption weights, but primarily because many administrative prices change in January.
• China releases CPI and PPI for January overnight. CPI inflation is set to decline from 0.8% y/y to 0.3 % y/y as Chinese New Year is in February this year instead of January as it was in 2025. Prices typically get a lift around the New Year so the base from last year is quite high pushing the annual inflation rate lower. PPI inflation is set to increase from -1.9% y/y to -1.6% y/y as higher commodity prices will likely feed through to PPI.

Economic and market news

What happened yesterday

In Norway, mainland GDP rose by 0.4% q/q in Q4 (cons: 0.4%, DB: 0.3%), reflecting continued moderate growth since early 2025. Private investments, residential investments and public demand contributed positively, while net exports weighed on growth due to imported cars. Hours worked remained flat, indicating higher productivity drove the rebound. The figure is slightly below Norges Bank's December estimate of 0.5%, but unlikely to change signals of a possible rate cut in June.

In the UK, Prime Minister Keir Starmer is under pressure to resign after two aides stepped down amidst controversy over Peter Mandelson's appointment as ambassador to Washington. Scottish Labour leader Anas Sarwar called for Starmer's resignation, but the Prime Minister has vowed to stay, citing support from key ministers and his mandate from voters.

In the US, the Trump administration proposed limiting fired federal employees' ability to appeal their dismissals to the independent Merit Systems Protection Board. Instead, appeals would go to the Office of Personnel Management, which reports directly to President Trump. The move aligns with Trump's broader efforts to reduce the size of the federal government.

In France, François Villeroy, president of the Bank of France and influential ECB governing council member, will step down in June, over a year before his term was set to end in November 2027. Known as one of the most vocal doves, his departure could marginally shift the council's balance towards the hawkish side, though the consensus to hold policy rates steady remains firm. French President Macron will appoint his successor.

In the euro area, the February Sentix Investor Confidence rose to 4.2 (cons: 0, prior: -1.8), signalling a stronger-than-expected improvement in investor sentiment with the highest reading since July 2025.

In pharma, Novo Nordisk sued Hims and Hers Health after the firm launched, then withdrew, a $49 semaglutide-based weight-loss pill following FDA backlash. The lawsuit highlights growing tensions between obesity drugmakers and compounding pharmacies, with the FDA's response signalling a broader crackdown on compounded GLP-1 drugs. Novo's shares rose 6%, while Hims fell 25% on the news

Equities: Global equities started the week on a firm footing, led by Japan and the broader Asian complex. Despite being less than six weeks into the year, the South Korean equity market is now up close to 30% YTD. Yesterday's equity tape was otherwise characterised by a classic risk-on with outperformance in cyclicals and small caps, while defensives such as consumer staples, healthcare and min vol lagged. This is broadly the set of dynamics one would expect in a market environment where geopolitical noise and disruption risk fade into the background and investor focus rotates back towards fundamentals. Consistent with this narrative, several major equity indices printed new all-time highs yesterday. In the US yesterday, Dow +0.04%, S&P 500 +0.5%, Nasdaq +0.9% and Russell 2000 +0.7%. This morning, Japan once again stands out on the upside on renewed expectations of fiscal stimulus, pulling most of Asia higher, while European and US equity futures are more mixed.

FI and FX: EUR/USD drifted toward the 1.19 mark as the broad USD softened at the start of the week. USD/JPY slipped back below 156 as the yen strengthened broadly, driven by general USD softness and lingering intervention concerns after the brief post-election bout of JPY weakness. In the US, yields edged slightly lower, with both the 2-year and 10-year Treasury yields declining by 2bp. In the euro area, Bund yields saw a modest decline at the front end, with the 2-year down 1.5bp, while the 10-year remained unchanged. EUR/GBP was in for a reverse v shaped price action during yesterday's session as UK politics came back into focus. The oil price continues to trade close to USD70/bbl mark - a relatively high level compared to the development in recent months. Yesterday, saw EUR/SEK edge slightly lower on the back of a weaker dollar and benign risk sentiment. In Norway, focus turns to the monthly CPI release this morning.