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Danske Bank analysts note that the US ISM manufacturing came in at a weak 47.8 (down from 49.1 previously) yesterday, which was quite a disappointment to the market and takes us below the levels of January 2016 when the last US manufacturing recession hit.

Key Quotes

“On the back of the release, US rates fell, with notably 2Y swap rates down some 10bp and the dollar weakened with EUR/USD up roughly half a big figure. Equities down more than 1% in the US and negative sentiment has carried over to Asia.”

“Expectations for the October Fed meeting shifted to now stand at around 60% for an October cut as we indeed call for (compared with 40% before). More key US data coming with the non-manufacturing ISM tomorrow and jobs report on Friday.”