This Week’s Primary Economic Focus
The US will release its October ISM Manufacturing Index this week, pointing to continued strength in the manufacturing sector. In the afternoon, Federal Reserve Governor Goolsbee—who is not a voter in 2026 but will be in 2027—is scheduled to speak. He has highlighted inflation risks and previously supported the idea of extending rate hikes past October. Additionally, the QRA will publish its borrowing estimates.
The eurozone will publish its final October manufacturing PMI, which we anticipate to match the flash reading of 52.4, confirming robust growth momentum in the sector.
Sweden’s October manufacturing PMI will also be released. In September, the index rose to a three‑month high of 58.1, propelled by stronger new orders and production, and it has stayed above its long‑term average throughout 2026.
The Reserve Bank of Australia will deliver its policy decision overnight, with both our models and market participants forecasting a 25‑basis‑point increase to 4.85%, marking the fifth rate hike of 2026.
A busy week lies ahead, centred on the United States, where midterm elections will be held on Tuesday and the non‑farm payrolls report is due on Friday. Central banks will also meet: the Riksbank on Wednesday, Norges Bank and the Bank of England on Thursday. Inflation data will be released for both the eurozone and Sweden.
Recent Economic and Market Developments
Overnight Market Highlights
In China, the official manufacturing PMI slid into contraction at 49.3 in October, down from 50.1 in September (consensus 50.0). Weakness was broad: new orders and export orders stayed below 50, and both production and purchasing fell below the expansion threshold. Conversely, the private RatingDog Manufacturing PMI stayed in expansion at 52.0, slightly lower than September’s 52.1. The gap between the two indices reflects differing survey coverage and sampling approaches, Reuters noted.
Weekend Economic Updates
In the United States, the Employment Cost Index rose 0.8% quarter‑on‑quarter in Q3, matching expectations and easing from 0.9% in Q2. Wage and benefit growth slowed modestly, indicating that labour‑cost pressures remain contained. However, if the labour market tightens further, we expect wage pressures to pick up in the coming quarters.
Federal Reserve commentary came from Governor Barkin (non‑voter in 2026, voter in 2027), who said the Fed’s “direction of travel” is clear, but the pace remains the key question, favouring a gradual tightening path. Governor Logan (voter in 2026, non‑voter in 2027) took a more hawkish stance, stating that at least two additional rate hikes would likely be required to anchor price stability. Logan has voiced similar views previously, making her current stance notable given her vote for unchanged rates at the October meeting.
Eurozone GDP expanded 0.4% quarter‑on‑quarter in Q3, exceeding the 0.2% consensus and slowing from 0.6% in the previous quarter. Stripping out Ireland’s volatile contribution, growth was 0.2%—in line with expectations. The region’s momentum persisted, led by Germany and Spain, while France and Italy underperformed. Data point to stronger domestic demand, particularly private and government consumption, offsetting weaker foreign demand.
Preliminary October inflation figures for individual eurozone economies showed mixed results. German inflation fell below expectations, offsetting higher readings from France and Italy, while Spain matched forecasts. Overall, the composite HICP is expected to land near initial estimates, with Wednesday’s print projected at 4.0% year‑on‑year (up from 3.8% in September) and core inflation steady at 2.50% y/y.
Eurozone unemployment remained steady at 6.5% in September, slightly above the 6.4% forecast, after a revision up from 6.4% in August. The number of unemployed increased by 120k, with France accounting for roughly two‑thirds of that rise (80k). The balanced labour market should contain second‑round wage pressures.
In Norway, the seasonally adjusted unemployment rate held steady at 2.0% in October, matching expectations and underscoring a still‑tight labour market despite slower growth. The figure is slightly below Norges Bank’s September MPR forecast of 2.1%, but insufficient to change our view of an unchanged policy rate at next week’s meeting.
Additional Norwegian developments include Norges Bank’s announcement of plans to sell NOK 300 million per day in November. The revised oil‑adjusted deficit for 2026 (down NOK 16.5 bn) would have implied daily sales of roughly NOK 850 million, yet the bank and the Ministry of Finance opted for a smoother path through the Petrobuffer Fund, anticipating future NOK purchases in 2027. This measured approach explains the more modest sale volume.
In commodities, Brent crude is hovering just below $110 /bbl after OPEC+ left December production targets unchanged at Sunday’s meeting, with Gulf output still curtailed by disruptions tied to the Iran conflict. Attention now shifts to the full OPEC+ gathering on 29 November, where 2027 quotas are expected to be discussed. The International Energy Agency cautions that excess supply could emerge in 2027 if Gulf flows normalize.
In cryptocurrency, Binance has started a phased reopening of withdrawals after a record $6.3 bn hack. The exchange is first enabling withdrawals for select assets—Ethereum, USDT, and USDC—with additional tokens to follow gradually. Within hours of the reopening on Sunday, users withdrew a net $3.64 bn, representing 2.1% of the assets that were held on the platform the day before the breach. Market participants will watch closely to see whether crypto sentiment remains impacted in the coming weeks.
FX and Fixed Income: Fitch placed France on a negative outlook on Friday, an unscheduled move that we expect will pressure French OATs and widen EUR weakness, with EUR/USD already near the 1.1150 level. The upcoming US midterm elections are the week’s primary political event; prediction markets still price a Democratic sweep as the most likely outcome, which we anticipate could modestly support the broader USD. The Norwegian krone has kept strengthening, driven by a higher energy risk premium and a tight European gas market. EURNOK closed at 10.2724, while SEKNOK fell to a new YTD low of 0.9366. EUR/DKK also hovered near recent lows as concerns over French debt continued to weigh on the euro.
