Today, JOLTs data on staff turnover for December will be released, which is an important indicator of labor demand for the Fed. In recent months, the number of vacancies has stabilized after a prolonged decline that began in 2022. Also expected in the evening are speeches by representatives of the Fed – Daly and Bostic, whose comments may give the market additional guidance on monetary policy.
In Sweden, the minutes of last week's Riksbank meeting will be published at 9:30 (CET). Then the regulator unanimously decided to reduce the rate by 25 bps. However, despite the lack of formal agreement, there is no unity among the board members, and the head of the regulator Teden adheres to a tougher rhetoric. The protocol will make it possible to better understand the arguments of the parties and confirm or deny the December rate forecast.
Geopolitical tensions in the Arctic and Trump's interest
The other day, analysts published a study on the growing tensions in the Arctic. Donald Trump's interest in Greenland is not surprising given the deepening cooperation between China and Russia, the expansion of activity in the northern sea routes and commercial interests in the region.
Key financial market events
• North American tariffs. A few hours before the tariffs on goods from Mexico and Canada took effect, Trump agreed to postpone them for a month. In exchange, Mexico pledged to strengthen border controls to combat drug trafficking, and Canada pledged to introduce a new official to address fentanyl issues. As a result, market sentiment improved.
• China and the USA. Today, 10% US duties on Chinese imports come into force. In response, the Chinese Ministry of Finance announced the introduction of counter tariffs.: 15% for American coal and LNG, 10% for oil, agricultural machinery and automobiles. These measures will take effect on February 10.
• The Eurozone. January HICP inflation rose to 2.5% YoY, which is higher than forecasts (expected 2.4%). The growth was driven by an increase in the cost of energy resources, while food inflation slowed down. Core inflation remained at 2.7%. In addition, the business activity index (PMI) rose to 46.6, which signals the stabilization of the industry, but remains below the growth limit (50).
• France. The country's prime minister has passed the next part of the 2025 budget through parliament without a majority, which creates the risk of a vote of no confidence. However, the Socialists plan to abstain, and the far-right previously supported the budget, which increases the chances of the head of government to retain office.
• USA. The ISM index of business activity in the manufacturing sector rose to 50.9 (49.8 was expected), which was the best result since September 2022. The improvement is observed in key components: production, prices, employment and new orders.
• Sweden. The manufacturing PMI rose to 52.9, marking the sixth consecutive month of growth. By comparison, France and Germany remain below 50, underscoring the strength of the Swedish industry.
Stock market dynamics
Global stock indexes declined by about 1% as news of Trump's tariffs triggered the classic "flight to safety" scenario. However, after the announcement of the transfer of tariffs against Canada and Mexico, the losses were partially compensated. In the US, the Dow Jones fell 0.3%, the S&P 500 by 0.8%, the Nasdaq by 1.2%, and the Russell 2000 by 1.3%. Today, markets in Asia are showing steady growth amid hopes for a softening of the rhetoric on tariffs against China.
Bonds and the foreign exchange market
• Bonds. The decision to postpone tariffs for Mexico and Canada has reduced the risks of an escalation of the trade war, which is positively perceived by bond markets.
• Currencies. Among the major currencies, the Mexican peso (MXN), Brazilian Real (BRL) and Canadian dollar (CAD) have become the best since Friday. The US deal with Mexico caused MXN to rise after its sharp decline amid the threat of tariffs. USD/CAD declined by 1.3% after a similar agreement with Canada. EUR/USD remains near 1.03, EUR/NOK recovered to 11.75, and the Swedish krona holds its position at 11.46 against the euro.