Fra Danske Bank:
Olavi Kaskisaari, [email protected] , Economist
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In the euro area, ECB president Christine Lagarde will be speaking at the Paris Peace Forum. Otherwise, Wednesday lacks a clear market moving data release or an event.
In Japan, PPI print for October will be released overnight. Consensus is expecting a 0.3% m/m (prior: -0.3%) and a 6.5% y/y (prior: 6.8%) rise in producer prices as high energy prices and a weak yen continue to build price pressures in the corporate sector.
Economic calendar
In Japan, The Reuters Tankan sentiment index for manufacturers rose to 27 in November (prior: 22) supported by booming semiconductor demand. The print was the highest in five years. Non-manufacturers’ sentiment rose to 35 (prior: 23).
In commodities, oil prices ticked up on Wednesday morning with Brent crude futures trading above USD 92/bbl after breaking bellow the USD 90/bbl mark on Tuesday. We think there is limited further downside potential for oil prices in the near-term and that the market will be prone to trade on headlines from peace talks and possible impeachment of US Defence Secretary Pete Hegseth. The Brent forward market prices in a further drop in Brent crude just below USD 80/bbl on 12M – still far above the USD 60-65/bbl from the beginning of the year.
In Norway, Core inflation dropped from 3.0% to 2.7% in October (Danske: 2.7%, consensus: 2.8%). This is exactly in line with Norges Bank’s estimate from the September MPR and will in isolation be neutral ahead of the December meeting. Inflation in Norway seems to be trending downwards roughly as expected, but domestic (cost-driven) inflation remains too high, and will keep monetary policy restrictive for a period. We still expect the Norges Bank to be on hold in December, in line with market pricing.
In Denmark , October CPI inflation stayed unchanged at 2.2%. Prices are now close to October 2025 levels despite the removal of the electricity tax. Food prices declined 0.6% and thus the downward trend looks to continue. Core inflation declined to 1.7% from 1.9% and the s.a. m/m increase in core prices is 0.0 for the 2nd month in a row. Thus far there are no signs that cost pressure is spreading from energy to core goods or services.
In the US , the CPI print came in above expectations. October Headline CPI was 0.4% m/m (Danke and cons: 0.3%) and Core CPI inflation was 0.3% m/m (Danske: 0.3%, cons: 0.2%). Before the CPI release on Tuesday, the Fed’s Waller commented that a half-point rate hike may be needed in December if October core CPI comes in around 0.3% or higher.
On Tuesday evening after the CPI print the Fed’s Goolsbee, Paulson, Logan and Bowman all made remarks about inflation. Goolsbee called the report “borderline disturbing” and Logan stated that faster hikes might be needed. Paulson and Bowman were more on the Dovish side with Paulson stating that gradual tightening is appropriate for now, but this may change if expectations drift higher. Bowman said that she is worried about persistent inflation as well, but she also noted that tighter financial conditions (from higher bond yields and falling stock prices) posed potential risks to the economy.
The market has now fully priced in a 25bp hike in December with a small chance for a 50bp hike. We do not think the CPI print meets the high bar for a 50bp move. Waller is the first member to suggest such a hike, while most members have continued to signal support for a gradual approach. A 50bp hike would also be a drastic step considering recent stock market volatility. Financial conditions remain tight and already appear to have weighed on credit demand, as indicated in the latest SLOOS report.
Equities: Global equities were virtually unchanged yesterday and closed 0.1% higher, and this primarily driven by non-US indices. The S&P 500 fell 0.4% and the Nasdaq was -0.7%, however with the AI narrative ‘revival’ Asian equities did the heavy lifting, which has also extended into the overnight session. South Korea is leading the way up almost this morning rising 3%, also supported by CoreWeave’s earnings beat yesterday night. The past few sessions indicate that the AI trade is not dead and buried. In fact, FT reported that Anthropic’s advisers are considering lifting the IPO valuation to $1.5trn or more, and quite frankly, you do not raise the price of a deal like that unless the order book is essentially asking you to. Whatever doubts there are about AI valuations, demand for exposure to the theme is clearly not one of them. Nasdaq futures are up around 1.3% and S&P futures around 0.6%.
FI and FX: Yesterday, global bond yields rose significantly on the back of higher-than-expected US inflation data. This comes after the stronger than expected US labour market report from last week and thus market expectations for more hikes from the Federal Reserve is strengthened once again. There were comments from Fed Officials which also supported the view for a tighter US monetary policy. Hence, the 2Y Treasury yield rose 17bp, while the 10Y Treasury rose 10bp and there is now a full rate hike priced in for December. There was also a solid rise in European government bond yields led by the front end.
In the FX market, the dollar strengthened against the euro and yen. There have been modest movements in the EURUSD and USDJPY in Asian trade this morning. The Asian bond market has followed the move from the US with higher yields.
See also our in-depth FI and FX morning comment *
The Editorial – AI: The bubble that keeps getting cheaper , 8 November
Reading the Markets EUR – Real rates have peaked , 5 November
Research US – US Midterm Review – Blue wave political ramifications , 4 November
Postcard from China – Weak economy, world-class manufacturing , 4 November
Executive Briefing – Pause in hiking cycle amid higher energy prices , 2 November
Report completed: 11 November 2026, 06:45 CEST
Report first disseminated: 11 November 2026, 07:30 CEST
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