US JOLTs out today as tariff plans stall

In focus today

Today, the US JOLTs labour turnover data for December will be released. The number of job openings, a key measure of labour demand for the Fed, has stabilised in recent months following a steady decline since 2022. The Fed's Daly and Bostic are scheduled to speak in the evening.

In Sweden, the Minutes from last week's Riksbank meeting will be released at 9:30 CET. The meeting resulted in a unanimous decision to cut rates by 25bp. Despite no dissenters, the Board is divided, where governor Thedéen is in the hawk camp. The Minutes will give interesting insights into their reasoning, including what lies in the assessment that the "forecast for the policy rate made in December essentially holds [...]".

Yesterday, we published a research piece in which we discuss tensions in the Arctic. We think Donald Trump's strong interest towards Greenland is not surprising when you consider the ever-deepening Sino-Russian collaboration, the gradually increasing activity on northern waterways, and the business interests of Trump's inner circle in the Arctic. 

New feature from the Danske Bank Global Research team: Personal customers in Denmark, Sweden and Finland now have access to a selection of research articles in Danske Bank's Mobile App. You will find the new feature under Investments.

Economic and market news

What happened overnight

North America and tariffs, just hours before tariffs on Mexico and Canada were set to take effect, Trump agreed to immediately pause the anticipated tariffs for one month with Mexico and Canada, averting a damaging trade war in the region. This comes as Mexico and Canada have agreed to enhance border enforcement to combat drug trafficking. Consequently, market sentiment improved on the headlines from both Mexican, Canadian and US officials.

China and the US, the 10% tariff levied on China is set to take effect today. This morning, China's finance ministry announced a package of tariffs including a 15% tariff on US coal and LNG, and a 10% tariff on crude oil, farm equipment and some autos. These new tariffs are scheduled to take effect on 10 February.

What happened yesterday

In the euro area, HICP inflation increased to 2.5% y/y in January, slightly above expectations (cons: 2.4%, prior: 2.4%). The increase was entirely due to energy inflation while food declined. Core inflation was unchanged at 2.7% (cons: 2.6%, prior: 2.7%). The January inflation print showed the same picture as in the many last months with a continued softer momentum in underlying inflation amid energy prices affecting the headline reading. We also got euro area PMI, which climbed to 46.6 in January, as the manufacturing industry showed some signs of stabilisation, bringing PMI closer to the 50-mark separating growth from contraction.

In France, the French prime minister passed another part of the 2025 budget through parliament without a majority, exposing him to a no-confidence vote on Wednesday. The Socialist Party plans to abstain, and the far-right National Rally previously supported the budget, suggesting the Prime Minister may survive. However, uncertainty remains due to potential defiance from Socialist members and the RN's unconfirmed stance.

In the US, the ISM January manufacturing PMI rose to 50.9 (cons: 49.8, prior: 49.3) showcasing a strong performance and marking the highest reading since September 2022. Increases were observed in production, prices paid, employment and new orders. Especially a strong uptick in order-inventory balances according to both PMI and ISM, which signals positive momentum for manufacturing growth.

In Sweden, the manufacturing PMI for January rose to 52.9 (prior: 52.4), marking the sixth consecutive month in the growth zone, above the 50-mark. This stands out, as France and Germany remained below the 50-mark for January.

Equities: Global equities were lower yesterday by approximately 1%, with cyclicals underperforming defensives. It was a classic risk-off mode following the tariff announcement from Trump. However, please also note the relatively small magnitude of the drop and the rebound following the postponement of tariffs against Mexico and Canada. While the uncertainty persists, we also draw the conclusion that this is more than ever a president who is open to discussion, hence often barking much more than he bites. In the US yesterday, Dow -0.3%, S&P 500 -0.8%, Nasdaq -1.2% and Russell 2000 -1.3%. As Trump is set to speak with China later today on tariffs, hopes are that we will see a softer outcome on tariffs against China. Consequently, Asian markets are rebounding sharply this morning, led by China. US and European futures are marginally higher this morning.

FI: The potential trade war between US and Mexico and Canada has been delayed as the tariffs on both Mexican and Canadian goods have been delayed a month after Mexico promised to send more troops to the border between US and Mexico and Canada would introduce a new government official that will deal with problems on fentanyl (a fentanyl-Czar). This is good news for the bond market.

FX: The best performers among major currencies since Friday is ... MXN, BRL an CAD. Well, that is one way of summarising the recent buzz and heightened volatility following the US tariff news being 'on' and then (for now) 'off'. Yesterday, a deal was struck between the US and Mexico which delays the tariffs for 30 days to give time for negotiations - the MXN rallied on the news after previously being sold off. Late Monday night, a similar deal was stuck between the US and Canada, which was followed by a 1.3% drop in USD/CAD. EUR/USD still hovers around 1.03. EUR/NOK has erased yesterday's losses, now at 11.75. The SEK holds on to gains vs EUR at 11.46. EUR/DKK is stable.