As U.S. investors return from a three-day holiday weekend, gains in European equities suggest that market risk has shifted to a narrative of bad news is good news, as deteriorating economic data sparks hopes of action by the European Central Bank. Final August Markit manufacturing purchasing managers’ index (PMI) data released yesterday registered a sequential contraction to 50.7 from 51.8 in July, lower than the flash 50.8 initially released. Individual measures for Germany, Italy and Spain were also weaker than their respective flash releases. France saw an improvement, albeit still deep in negative territory at 46.9. Across the channel UK manufacturing managers also indicated a slowing pace of activity as final index data registered lower than forecasts. With ECB president Mario Draghi scheduled to make the bank’s monthly rate announcement on Thursday, stock and currency traders are clearly signaling expectation for a fresh dose of stimulus to combat low inflation and sluggish activity. The growing crisis in eastern Ukraine, where hostilities escalated over the weekend, casts a shadow over the bank’s policymakers as they position themselves. With historically accommodative policy already in place and the prospect of a Russian natural gas squeeze as winter begins, memories of the 1973 OPEC embargo and ensuing inflationary spike provides an outlier concern.

Detroit readies for day of reckoning. A federal bankruptcy court session to determine approval for Detroit’s proposed debt restructure is set to start today. The $18 billion filing will be closely watched for indications of how future municipal shortfalls will be managed as pension obligations continue to weigh on U.S. municipalities.

Bidding war for Family Dollar ratchets up. After Charlotte–headquartered discount retail chain Family Dollar rejected an earlier bid in favor of one from Dollar Tree, Dollar General raised its bid to take over its smaller rival. The increase, to $80 per share, represents an additional 2 percent increase to a total in excess of $9 billion for the retailer.

U.S. manufacturing and construction data to be released. ISM manufacturing survey results are set to be announced at 10 am U.S. Eastern time. Consensus forecasts show a modest decline to 56.8 from July’s 57.1 reading. The July level was the strongest since April 2011, driven by a sharp increase in new orders. Separately, July construction spending data is expected to rebound from a month-over-month contraction in June as both public and private sector outlays rebound. Improvements in both measures would continue broadly to support relative strength for the U.S. economy.