US midterms and NFP take centre stage this week

In focus this week

From the US, the October ISM Manufacturing survey is due for release. The survey continues to suggest solid activity in US manufacturing. In the afternoon, the Fed's Goolsbee (non-voter in 2026, voter in 2027), is scheduled to speak. He has flagged inflation concerns, although he was among the members who argued for pushing rate hikes beyond October. Finally, QRA borrowing estimates are announced.

In the euro area, the final manufacturing PMI for October is released. We expect it to confirm the flash release of 52.4 and thereby show a decent growth momentum.

October manufacturing PMI from Sweden is also released. In September manufacturing PMI increased to a three-month high of 58.1, driven by a significant rise in new orders and production. They have generally help up well over the past year remaining above the long-term average during all of 2026.

Overnight, the Reserve Bank of Australia will release its policy rate decision, where both we and markets expect a 25bp hike to 4.85% from 4.60%. This would mark the fifth hike of 2026.

It is a busy week ahead with the main focus on the US, where both the midterm election on Tuesday and nonfarm payrolls on Friday are due. We also have policy rate decisions from the Riksbank on Wednesday, and Norges Bank and the Bank of England on Thursday. On the inflation side, we receive preliminary prints from both the euro area and Sweden.

Economic and market news

What happened overnight

In China, the official manufacturing PMI fell back into contraction at 49.3 in October from 50.1 in September (cons: 50.0). The details were weak, with new orders and new export orders both remaining in contraction, while production and purchasing activity also slipped below 50. In contrast, the private RatingDog Manufacturing PMI remained in expansion at 52.0 in October, only slightly below 52.1 in September. The divergence between the private and official PMI indices likely stems from differences in the surveys' coverage and sampling methods, according to Reuters.

What happened over the weekend

In the US, the U.S. Employment Cost Index increased 0.8% q/q in Q3, in line with consensus and down from 0.9% in Q2. Growth in both wages & salaries and benefits slowed moderately, suggesting wage pressures remain quite moderate. That said, should labour markets tighten further, we would expect wage pressures to build in coming quarters.

On the wires, Fed's Barkin (non-voter in 2026, voter in 2027) said the "direction of travel" for the Fed is straightforward, while the key question is the pace, adding that a gradual approach is appropriate for now. We also heard from Fed's Logan (voter in 2026, non-voter in 2027). She sounded hawkish, saying that at least two more hikes would be needed to ensure price stability. We have heard similar remarks from her before, though it is still interesting given that she voted in favour of unchanged rates at the October meeting.

Euro area GDP growth came in higher than expected at 0.4% q/q in Q3 (cons: 0.2% q/q, prior: 0.6% q/q). Excluding the volatile Irish economy, which is what matters for the ECB, the euro area grew 0.2% q/q, broadly as expected. The decent growth momentum in the euro area thus continued in Q3, driven by Germany and Spain while France and Italy disappointed. National details suggest domestic demand, especially private and government consumption, expanded in Q3, while foreign demand was a drag.

National euro area preliminary inflation prints for October were released, with country data surprising in different directions; German inflation came in below expectations, largely offsetting hotter readings from France and Italy, while Spain was in line with expectations. Summing up, we land close to initial expectations for the aggregate euro area HICP print and expect Wednesday's release to show a rise to 4.0% y/y from 3.8% in September, with core inflation unchanged at 2.50% y/y.

The euro area unemployment rate was unchanged at 6.5% in September (cons: 6.4%), following an upward revision to 6.5% in August from 6.4%. The number of unemployed rose by 120k, mainly driven by France, which accounted for 80k. The rather balanced aggregate euro area labour market should limit the strength of second-round effects on inflation.

In Norway, the seasonally adjusted unemployment rate was unchanged at 2.0 % in October, in line with our expectation, and confirms that the labour market remains tight despite weaker growth. This is marginally lower than Norges Bank's forecast from the latest MPR in Sep (2.1%), but not enough to alter our expectations of unchanged rates at next week's meeting.

Also in Norway, Norges Bank announced it will sell NOK 300mn/day in November. The revised oil-adjusted deficit for 2026 (down NOK 16.5bn) should in isolation have pushed daily sales to around NOK 850mn/day, but Norges Bank and the Ministry of Finance likely chose to smooth flows via the Petrobuffer Fund given they will need to buy NOK in 2027. A sensible approach that explains the more modest pace.

In commodities, Brent crude is trading just below USD 110/bbl this morning after OPEC+ kept December production targets unchanged at Sunday's meeting with Gulf output still constrained by disruptions linked to the Iran war. The decision leaves the main focus on the full OPEC+ meeting on 29 November, where the group is expected to address 2027 quotas. The International Energy Agency has warned of excess supply in 2027 should Gulf flows return to normal.

In cryptocurrency, Binance has begun a phased reopening of withdrawals following a record USD 6.3bn hack. The exchange is initially allowing withdrawals in selected tokens, including Ethereum, USDT and USDC, while further assets will be restored gradually. Users withdrew a net USD 3.64bn in the hours after withdrawals reopened on Sunday, equal to 2.1% of assets held on the exchange the day before the hack. It will be interesting to see whether cryptocurrency sentiment is materially affected in the coming weeks.

FI and FX: France was put on negative outlook by Fitch on Friday. This was outside the usual rating calendar, so it was a surprise and we expect OATs will come under pressure this morning. Broad EUR weakness with EUR/USD trading near the 1.1150 mark could well extend further today given the Fitch announcement. This week's main event will be the US midterms. Prediction markets still see a Democratic sweep as the most likely outcome, and we would expect a Democratic sweep to have a modestly positive impact on broad USD. The NOK has continued to strengthen, supported mainly by an elevated energy risk premium and a very tight European gas market. EURNOK ended the day at 10.2724, while SEKNOK declined to a new year-to-date low of 0.9366. EUR/DKK traded close to recent lows towards the end of last week as the negative EUR sentiment related to French debt woes weighs on the pair.