Swedish July CPI lands today with core seen at 0.4% y/y, a week before the Riksbank rate decision. The krona hit 10.95 against the euro, its strongest since mid-June.
Sweden's preliminary July inflation figures land today, and the stakes for the krona are clear after last month's fuel-tax cut and public transport subsidy distorted the annual comparisons. Core CPI is expected at 0.4% year-on-year, CPIF at 0.6% and headline CPI at 0.1%, all reflecting what the Riksbank flagged as a temporary July effect.
The numbers arrive a week before the central bank's next rate decision. The market is pricing roughly 40 basis points of Fed hikes over the coming year, but the Riksbank's own path looks more open-ended. Norway's July house prices fell 1.1% month-on-month, the sharpest drop since March 2020 and above Norges Bank's forecast, suggesting higher rates are starting to bite in the housing market. The Norwegian CPI print Monday will be the decisive input before Thursday's rate meeting there.
The euro area final July services PMI was revised marginally higher to 51.7, confirming the improvement in activity conditions from June. Composite PMI came in at 52.0. EUR/USD traded up toward 1.1550 on the session, while EUR/SEK fell to 10.95, its lowest since mid-June. EUR/NOK was anchored near 11.00.
Global equities extended gains for a fifth consecutive session, taking the five-day advance to roughly 5%. The rally has been dominated by cyclicals outperforming defensives and growth outpacing value, a tech-driven rather than macro-driven move. The VIX eased only from just above 17 to just below 16 over the period, an unusually modest decline for a rally of this size. Enthusiasm faded through the U.S. session, with the Nasdaq underperforming broader markets into the close. Asian markets this morning show the same divergence: tech-sensitive South Korea was materially weaker, while less tech-exposed markets traded firmer. European and U.S. futures are higher, though Nasdaq futures are again lagging.
In the U.S., the July ADP National Employment Report came in at 44,000, well below the 70,000 consensus. Hiring was uneven across sectors – education and health care added jobs, while leisure and hospitality declined. ADP also reported an uptick in wage growth among workers changing jobs, suggesting labor market tightness and improving worker bargaining power despite slow aggregate job growth. At the margin, that is a hawkish signal for the Fed.
The ISM services index rose to 54.1 in July from 54.0, below the 54.5 consensus. Business activity, new orders and price indices all rose, but the employment index weakened sharply. The report points to strong demand with continuing price pressures.
Fed Governor Cook (voter, neutral) voted with the majority last week to hold rates steady but said that may no longer be possible unless there are sure signs ahead that inflation is easing. San Francisco Fed's Daly (non-voter) fully backed the July hold, saying the Fed needs more information on whether inflation is driven by temporary supply shocks or is becoming more persistent. Minneapolis Fed's Kashkari (voter, hawk) said rates should "start slowly moving up," arguing policy is not particularly restrictive. Philadelphia Fed's Paulson said policy is already mildly restrictive and favored holding rates steady.
In China, the private-sector RatingDog services PMI fell sharply to 50.4 in July from 54.1 in June, confirming the declines seen in the official NBS data. Services growth weakened over the summer in both current demand and new orders. Trade data due overnight Friday will focus on whether exports continue to benefit from improving foreign demand, a rare bright spot as domestic leading indicators have weakened.
Brent crude traded in the $79-81 range as oil markets remained anxious but held onto hopes of a new U.S.-Iran deal to reopen the Strait of Hormuz. Iran said talks with Oman were moving forward and that an agreement had been reached on a shipping route, though safe passage and a broader deal remain uncertain. Broad euro area and U.S. yields ended flat on the session.
For the rest of the day, euro area retail sales, the U.S. July Challenger Report on layoff announcements and Q2 flash productivity growth are due. Fed's Musalem is set to speak in the afternoon.
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