US January jobs report takes centre stage

In focus today

• In the US, the January Jobs Report, that was originally scheduled for last Friday, will be published today. We still forecast NFP growth at +60k, unemployment rate at 4.4% and the annual benchmark revisions at negative -1.1 million (early estimate was -919k). 

Economic and market news

What happened overnight

In China, January CPI inflation eased sharply to 0.2% y/y (cons: 0.4%, prior: 0.8%), marking the lowest print since October. Food prices fell for the first time in three months (-0.7%), but also non-food inflation slowed (0.4%). Meanwhile, PPI fell 1.4% y/y (cons: -1.5%, prior: -1.9%), extending the contraction to a 40th consecutive month. The slower decline reflects Beijing's continued efforts to rein in excessive price competition. However, in monthly terms, the PPI rose 0.4% m/m in January, accelerating from a 0.2% rise in December.

In the US, the Treasury Department issued a general license to facilitate oil and gas exploration and production in Venezuela, allowing the use of US goods, technology, and services. The move aims to boost Venezuela's crude production. According to the US Energy Information Administration, output could rise by up to 20% in the coming months. Payments to sanctioned entities must be made into a US-overseen fund, and the license prohibits the formation of new joint ventures.

What happened yesterday

In the US, December retail sales excluding autos, gas, building materials and food services (SA) declined by 0.1% m/m (cons: 0.4%). Retail sales showed broad declines across categories, though the heavily seasonally adjusted December data should be interpreted with caution. On a non-seasonally adjusted basis, control group sales grew by 4.4% y/y, which remains a healthy pace in historical terms.

The Q4 Employment Cost Index also surprised to the downside. The ECI remains closely correlated with the JOLTs data, which suggests that wage growth will continue to slow down during H1 2026.

In Norway, January core inflation rose to 3.4% y/y (cons: 3.0%, NB: 2.9%), marking a hawkish surprise as domestic service price inflation, excluding rents, drove the increase. Higher municipality fees and insurance costs contributed to the upside, while few downside surprises were observed across subcomponents. The release came with higher-than-usual uncertainty due to annual reweightings and potential volatility in municipality fees.

In Denmark, January inflation fell to 0.8% y/y from 1.9% in December, driven mainly by the near removal of the electricity tax. Food prices rose 2.4% m/m, ending a five-month decline, with the increase being slightly above the seasonal norm. Overall, underlying inflation remains close to 2%.

In climate politics, President Trump is set to repeal the Obama-era endangerment finding that declared carbon dioxide a threat to human health, removing the legal basis for federal greenhouse gas regulations. The repeal targets vehicle emission standards but excludes stationary sources like power plants. Industry groups are cautious about supporting the move due to legal uncertainties, and critics warn it could harm global climate efforts while boosting China's clean energy industry. The repeal is expected to face significant legal challenges.

Equities: Equities finished broadly unchanged yesterday. Asia, led by Japan, outperformed, while both the US and Europe saw modest declines. Interestingly, the Dow Jones managed to close at a fresh all-time high. We didn't have big rotation yesterday. However, banks was among the weaker performers as yields ticked lower. In the US yesterday, Dow +0.1%, S&P 500 -0.3%, Nasdaq -0.6% and Russell 2000 -0.3%. This morning, the constructive tone in Asia continues, again with Japan leading gains, but with broad-based strength across the region. US and European futures are also trading higher at the time of writing.

FI and FX: In the US, yields declined across the curve following yesterday's weak December retail sales and ECI data, with the 2-year Treasury yield down 3bp and the 10-year falling 5bp. EUR/USD remains anchored around the 1.19 mark ahead of today's US jobs report. USD/JPY has continued to grind lower below 154, supported by a steady JGB market. CHF continues to be among the top performers this year with EUR/CHF and USD/CHF trading at the lowest level since the SNB removed removal of the floor in 2015. The Swedish krona had a constructive session yesterday, with EUR/SEK heading below 10.60 once again. Yesterday marked a very volatile session in Norwegian markets following the much higher-than-expected Norwegian core inflation print for January, with EUR/NOK dropping to the low 11.30s. EUR/DKK climbed to its highest level since mid-January yesterday, breaking above the 7.4700 level.