US JOLTs report in focus

In focus today

In the US, the June JOLTs report will be in the spotlight. Job openings have increased modestly this year, which has historically predicted rising wage cost pressures ahead. June trade balance data will also be released in the afternoon and the preliminary reading pointed towards a stable trade deficit from May. The Fed's Schmid (non-voter, hawk) will be on the wires overnight.

In Denmark, the FX reserve figures for July are set to release at 17:00CET. Danmarks Nationalbank (DN) intervened in June for the first time in more than three years to curb the upwards pressure on EUR/DKK. EUR/DKK has continued to trade at an elevated level, and the market will look to see whether this has prompted more FX intervention. If that was the case, it may add to speculation about a unilateral rate hike by DN over the coming year.

Economic and market news

What happened overnight

In oil markets, Brent crude traded slightly higher overnight, moving back above USD 84/bbl. but holding most of Monday's decline. The move came amid conflicting headlines on whether US-Iran talks have resumed and US President Trump calling his latest offer of talks a "final chance" for Iran.

What happened yesterday

In the euro area, the final July manufacturing PMI came in at 51.9, only marginally below the preliminary 52.0 and still higher than the 51.4 recorded in June. The release broadly confirmed the preliminary picture of a rebound in manufacturing activity, with output rising further and factory price pressures easing, although new orders only rose modestly and employment remained weak.

In the US, the ISM manufacturing activity index came in at 55.6 in July, above consensus expectations of 54.0 and up from 53.3 in June. The release followed a similar positive uptick in the PMIs. Within the ISM details, new orders and especially employment improved, while the prices index moderated slightly. The production index moved sharply higher to 58.5 from 52.2, marking the strongest reading since November 2021. Furthermore, the order-inventory balance continued to improve, indicating a further need for increasing output. The bottom line is that US cyclical data is still looking very solid.

The Fed's Williams said he still expects inflation to cool gradually and reach the 2% target on a sustained basis by 2028, assuming energy prices and tariffs have peaked. He described policy as "well positioned" but stressed that the Fed would hike rates if inflation does not slow as expected.

Equities: Equities started August on a positive note with fresh all-time highs for several of the MSCI world indices. The move was driven by a strong sector rotation, combining further relief in software, which has now recovered 16% over the past week, with lower oil prices following more constructive rhetoric around Iran and the Strait of Hormuz. The cyclical rotation seen over the past three sessions therefore continued, while several defensive sectors lower despite the solid index gains. In Asia this morning, sentiment is somewhat weaker as scepticism around Asian tech and semiconductors weighs on regional markets. As a result, Asian equities trade lower even as both US and European futures move modestly higher.

FI and FX: Broad based yields declined and EUR/USD remained above 1.15 over yesterday's session, as cooling tensions between the US and Iran held Brent crude below USD 85/bbl. Both sides of the war have sent very conflicting signals on whether any talks are actually ongoing, with Iran denying all discussions aside from the ones held with Oman regarding the Strait of Hormuz. Today's most interesting data release will be the US June JOLTs report; job openings have shifted moderately higher this year, which has historically predicted rising wage pressures ahead. Additionally, Danmarks Nationalbank will release the FX reserve figures for July at 17:00CET and markets will look for any FX intervention. If that was the case, it may add to speculation about a unilateral rate hike by DN over the coming year.