In focus today
In the US, the April JOLTS report is due for release in the afternoon. The Fed follows the number of job openings as a key measure of labour demand. Back in March, the number of hires also showed tentative signs of a recovery. Moreover, the Fed’s Beth Hammack (voter, hawk) will be on the wires.
In the euro area, today brings the aggregate HICP inflation for May. We have already received 75% of the index from individual country releases, which came in slightly lower than expected. Importantly, the country releases did not indicate that rising prices from the energy shock was broadening beyond energy components. We expect headline inflation at 3.1% y/y and core at 2.4% y/y.
In Denmark, Danmarks Nationalbank’s press release on the May FX reserve will be published, providing insight into whether the central bank intervened in the FX market during May, where EUR/DKK hit a historic high level of 7.4741.
In Poland, the National Bank of Poland will announce its rate decision. We expect the policy rate to be kept unchanged at 3.75%, in line with consensus.
Economic and market news
What happened since yesterday
In the Oil market, Brent crude reversed much of last week’s ceasefire-driven decline, briefly trading above USD 97/bbl, after Iran reportedly halted negotiations with the US over continued fighting in Lebanon. Prices later eased after President Trump said negotiations with Tehran were continuing and signalled expectations of a deal to extend the ceasefire and reopen Hormuz “over the next week”. Trump also claimed Israel and Hezbollah had agreed to stop shooting, helping Brent slip back below USD 95/bbl.
In the US, ISM Manufacturing surprised on the upside in May and signals a more positive outlook for the economy than the PMI. The headline index rose to 54.0 (cons: 53.0, prior: 52.7), driven by strong new orders at 56.8 (prior: 54.1) and higher employment. The prices index edged marginally lower but remains historically elevated. The details suggest solid demand across both domestic and export orders, while an improved order‑inventory balance often points to further gains in production.
In the euro area, inflation expectations in the ECB’s consumer survey stabilised in April following the large uptick in March. The 3Y median expectation ticked down to 2.9% from 3.0%, while the 1Y median remained unchanged at 4.0%. Although the still elevated expectations support the ECB’s hike in June, the stabilisation buys the ECB more time to assess the impact of the shock before embarking on a second hike.
Also in the euro area, the unemployment rate remained at 6.3% in April similar to March. It was above the expected 6.2%, but the historical data was revised up while the actual number of unemployed persons fell from March to April. Hence, the rise in the unemployment rate should not be seen as a sign of new weakening in the labour market from the war in Iran.
In OPEC+, several member countries are reportedly leaning towards a modest 188,000 bpd increase in their July oil output target at Sunday’s meeting, mirroring the June hike excluding the UAE. However, with production still well below target due to export cuts and the SOH closure, the move is unlikely to affect oil prices unless it results in higher realised exports.
In Denmark, Social Democrat leader Mette Frederiksen has agreed to form a new centre-left minority coalition government, securing a third consecutive term as prime minister after the March election. The government will be presented this week and will include the Social Democrats, Social Liberals, Left Greens and Moderates.
Equities: Global equities rose yesterday and several indices set new all-time highs, but the move was extremely narrow. Leadership came almost entirely from energy and, needless to say, tech. The narrow leadership was certainly not something one could blame on the macro data. Rather, renewed tensions around Iran and a 5 percent jump in oil prices was the reason that 9 out of 11 sectors were lower yesterday. However, given the strong performance in tech, large cap cyclicals outperformed while minimum volatility and defensives underperformed.
It has become even more evident recently just how narrow equity market leadership has become. Since the end of March, global equities are up around 17 percent, but this has been driven especially by the tech sector, which globally is up close to 45 percent since the bottom. This reinforces what we have stressed many times this year, and what is becoming increasingly clear for investors across financial markets: 2026 will be a year dominated by AI and the AI buildout. We are seeing earnings growth that is four times what GDP growth would normally imply! From an equity and risk perspective, that means the 2026 story is AI to a much greater extent than oil, Iran, geopolitics and so on. It is more or less all about AI.
This morning, Asian markets are somewhat in the red, led by South Korea, which is down a couple of percent. But note that South Korea’s leading equity index is still up around 130 percent year to date. If there was any doubt about what that rhymes with, the answer is of course AI. European futures are marginally higher, while US futures are in the red this morning.
FI and FX: A rebound in the oil price set the tone in FX and fixed income markets yesterday. The rise in the oil price pushed up yields in US and Europe in parallel with 2Y EUR and USD swap rates rising as much as 6bp. EUR/USD fell and USD/JPY rose owing mainly to the rise in oil prices. EUR/SEK also rose and EUR/NOK initially traded back and forth on the news but is also trading at a higher level now.
