NORWAY: Analyst Views On 2026 Budget Proposal
See below for a selection of sell-side views ahead of tomorrow's budget proposal:
SEB: “We expect the government to hold back spending to leave room to meet demands from support parties"....“We expect petroleum revenue spending around 2.7-2.8% of GPFG, implying a still expansionary budget although a smaller impulse than the 1.3ppt in 2025”...“We expect broadly stable gross NST issuance next year (NOK 95-105bn in 2025). Considering large drawdowns in recent years there is still a need to continue the built up of the cash reserve”
DNB: “We anticipate a broadly neutral fiscal stance, with a structural non-oil budget deficit of NOK 573bn, corresponding to a 2.8% withdrawal rate in 2026 (vs. 2.7%)”.
JP Morgan: “Our economists expect Norwegian fiscal policy to remain expansionary in 2026 with plentiful room for fiscal thrust of 0.6% for next year"....“Our economists expect the structural non-oil budget deficit to be 2.8% of the oil fund’s value, i.e. complying with the 3% fiscal rule. Based on the current market value of the fund (which varies a lot on a daily basis), this translates, in nominal terms, to a structural non-oil deficit of ~NOK 570bn, up NOK 28bn from 2025”.
Nomura: "The government is likely to propose NOK billions for defence funding, and a reduction in electricity tax, which should contribute to lower energy inflation in 2026"..."Fiscal policy is likely to have an expansionary effect on GDP in 2026".
Danske Bank: “Currently we estimate a funding need of NOK87bn”....“Given that in previous years (2023 and 2024), the government has used the account to lower the issuance and thus drawn on the account, it could increase the account in 2026, as it has done in 2025, when we estimate it will be increased by some NOK3bn to NOK13bn. Hence, we end up with an issuance target of NOK90bn-100bn”
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AUSSIE 3-YEAR TECHS: (U5) Bounces Further Off Support
- RES 3: 97.190 - High May 5 2023
- RES 2: 96.932 - 76.4% of Mar-Nov ‘23 bear leg
- RES 1: 96.860 - High Apr 07
- PRICE: 96.550 @ 15:36 BST Sep 12
- SUP 1: 96.430/95.900 - Low Sep 3 / Low Jan 14
- SUP 2: 95.760 - Low 14 Nov ‘24
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
Aussie 3-yr futures are trading off recent lows. A resumption of gains from here would further narrow the gap with resistance at 96.730, the Sep 17 ‘24 high, leaving 96.860 as the next key level. Any continuation lower would instead strengthen a bearish threat. This would refocus attention on 95.760, the 14 Nov ‘24 low. Conversely, a reversal higher would open 96.860, the Apr 7 high.
FED: MNI Fed Preview-September 2025: A Reluctant Return To Easing
We've published our preview of the upcoming FOMC meeting - Download Full Report Here
- The Federal Reserve is set to resume its easing cycle at the September 16-17 meeting with a 25bp cut to the funds rate range to 4.00-4.25%.
- The decision to cut after a 5-meeting pause was well-telegraphed by Chair Powell, whose Jackson Hole speech described a “shifting balance of risks” toward a weaker labor market that “may warrant adjusting our policy stance”.
- The updated quarterly projections aren’t likely to bring many changes to the macroeconomic variables, but as usual the signal sent from the Fed rate “Dot Plot” will garner attention. A Committee split between expecting one or two further cuts this year is likely, keeping each of the remaining meetings of 2025 “live”.
- The Statement will downgrade the description of the labor market to reflect a rise in the unemployment rate and poor payrolls growth, and is likely to include at least one dissent to the rate decision.
- But with a Committee that is fairly divided on the way forward, Powell will be noncommittal on future action, reiterating that policy is not on a preset course, and upcoming decisions will be data-dependent.
- A key undercurrent is an increasingly activist approach to Fed personnel management from the White House, which leaves the composition of the FOMC uncertain not just over the medium-term but also at this meeting.
MNI’s separate preview of sell-side analyst summaries to follow on Monday Sep 15
RATINGS: Fitch: France Cut To A+ From AA, Portugal Up To A From A-
Fitch has downgraded France's sovereign rating to A+ (with stable outlook) from AA-. Release here.
- Among other factors in the decision, Fitch cites "High and Rising Debt Ratio", "Political Fragmentation Hinders Consolidation", "Weak Fiscal Record", "High 2025 Deficit", "Uncertain Fiscal Consolidation Path", and "Fiscal Rigidities".
- In "Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade", Fitch cites "Public Finances: A sustained increase in government debt/GDP over the medium term, due to failure to implement fiscal consolidation measures and/or a persistent increase in financing costs" and "Macro: Materially lower economic growth prospects and weakened competitiveness." Conversely, potentially leading to positive ratings action would be "Public Finances: Confidence that government debt/GDP will be put on a downward trajectory over the medium term, for example, due to fiscal consolidation and/or stronger economic growth".
- Fitch also raised Portugal to A (stable outlook) from A-, while elsewhere, S&P raised Spain to A+ (stable outlook) from A.
- As MNI wrote earlier, we expected France to be downgraded to A+ and Portugal to be upgraded to A.
