US PPI data in focus

In focus today and this weekend

• In the euro area, we get the first estimate of employment growth in Q3 and the second estimate of GDP. We expect that employment growth remained marginally positive at 0.1% q/q driven by gains in Spain and Italy. We expect the GDP estimate to confirm the prior release 0.4% q/q growth.
• In the US, October PPI data will be released. Headline PPI has increased in recent months on the back of higher energy prices. Core PPI has also increased driven by a sharp increase in volatile trade and transportation services. This is likely due to pass-through from fuel prices to the transportation component. We will watch for whether price pressures are broadening beyond energy-affected components
• Also in the US, the Fed's Daly, a non-voter in 2026 and voter in 2027, will be on the wires.
• National accounts for Q3 are released in Japan early Monday. Following a couple of solid quarters, by Japanese standards, consensus expects modest 0.1% qoq GDP growth. While the Tankan business survey and PMIs have been solid through Q3, private spending data has been to the weak side. It will take a big surprise to change the course towards another rate hike in either December or January.
• China's monthly batch of data is due for release early on Monday morning. Focus as usual is on retail sales and housing to see if there is any signs of improvement in the weak domestic economy. We expect to see more of the same with continued weakness. 

Economic and market news

What happened overnight

In commodities, oil is set for a second continuous week of declines as Brent crude futures trade above the USD95/bbl level on Friday morning. Oil prices have dropped sharply past two weeks in part due to easing geopolitical risks but saw a slight jump on Thursday on headlines of US President Donald Trump saying that "a deal with Iran was not needed."

What happened yesterday

In Norway, the number of vacant positions increased from 87k to 89.5k in Q3, taking the vacancy rate from 2.7 % to 2.8 %. The figures illustrate that demand for labour remains strong, partly driven by the public sector, and that the labour market remains a bit tighter than expected. If this sign of improving capacity utilisation is confirmed by the regional survey (Dec 10), it should clearly be hawkish for Norges Bank.

In Sweden, y/y CPI inflation was revised to 0.913% (flash: 0.91%), CPIF to 1.129% (flash: 1.13%) and CPIF-XE inflation to 0.114% (flash: 0.11%). Higher fuel and electricity prices were offset by lower package holiday prices, which fell by 10.8% m/m and were the main reason behind the downside surprise, contributing -0.2 pp. Package holiday prices account for the entire downside surprise in services, rather than a broad-based slowdown in service prices. Weakness was broader across goods, with clothing, furniture and several other categories recording softer-than-usual.

In the UK, Growth picked up in Q3 as UK GDP grew by 0.7% q/q. This was in line with consensus and up from 0.5% in Q2.  Services drove the expansion, particularly business-facing activities, while production rose only marginally and construction contracted. September GDP rose by 0.2% m/m, although August was revised down to flat from 0.1%. Overall, the figures point to firmer growth and a positive end to the quarter, but the sector split remains uneven.

In equity markets, Jensen Huang announced his resignation as Nvidia's CEO following a revealed affair with a suspected Chinese spy. Nvidia appointed Chief Financial Officer Colette Kress to be an interim CEO as the company looks for a permanent replacement for Huang.  

In the US, the Fed's Hammack (voter in 2026, a non-voter in 2027) stated that monetary policy needs to be more restrictive to lower inflation as the most recent data shows that inflation is moving in the wrong direction. Hammack has in the past been a hawkish dissenter, but on Thursday she stated that she prefers to see smaller and steadier rate moves. Hence, it sounds like Hammack is not ready to follow Waller, who called for possibly hiking rates 50bp at the December meeting earlier this week. In addition, the Fed's Williams (voter in 2026 and 2027) said on Thursday that the Fed has work to do to get monetary policy to the right place. The Fed's Daly (non-voter in 2026, a voter in 2027) also said that further rate hikes would probably be needed going forward.

Also in the US, The US2Y rose past the 4.8% mark on Thursday as yields have been on the rise during November. Pressure is now especially in the front end of the curve as inflation and labour market data have shown signs of heating up.

Equities: Global equities fell 0.3% yesterday, with the S&P 500 losing 0.3% and the Nasdaq 0.4%, while the Stoxx 600 rose 0.2% to yet another all-time high. Asian indices are mixed this morning and US futures are virtually unchanged. On paper it was a quiet session with little macro news, but there were a few idiosyncratic factors driving the markets, with 1) Nvidia, 2) oil and 3) yields, yet despite this Vix barely moved and is still just at 18.7. Equities generally absorbed two of the drivers with ease, while the bond market did not. Overnight, Asian markets are mixed, while US futures are virtually unchanged. 

FI and FX: It was again a tough day in the global bond markets with a solid rise in bond yields as well as bearish flattening of the yield curves. The 2Y US Treasury yield has risen almost 40bp since Thursday last week after the stronger than expected Nonfarm pay rolls on Friday last week and US inflation data this week.

EUR/USD continued to drop further below 1.11 yesterday, while USD/JPY is testing the 160-level again. The primary move behind the broad USD rally is the continuing uptick in US front-end rates, and the consequent curve flattening seen on both sides of the Atlantic