EU CREDIT SUPPLY: Aroundtown (ARNDTN): GBP £400m 7yr +155

SFIJ6 96.70/96.80 call spread paper paid 2.75 on 8K vs. 96.555

• A total of GBP1.25bln had been available.
• This leaves GBP10.421bln of the gilt in issue.

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EXECUTIVE SUMMARY: 

• Norges Bank is unanimously expected to hold the deposit rate at 4.00% on Thursday. The November decision will not be accompanied by an updated MPR or rate path projection, only a concise Monetary Policy Assessment. Norges Bank rarely makes meaningful policy rate or guidance pivots at these interim meetings, so the base case is for a short policy statement with no new signals.
• We expect the September guidance to be retained: “The economic outlook is uncertain, but if the economy evolves broadly as currently projected, the policy rate will be reduced further in the course of the coming year”.
• The September decision was best described as being a "hawkish cut", with the updated rate path being consistent with one rate cut per year in the coming three years, implying a slow burn to a terminal rate of around ~3.25%. That said, domestic developments since September have been dovish on net, with CPI-ATE inflation printing below the September MPR projections and registered unemployment ticking up unexpectedly. While these developments may get some airtime in November, they are more relevant for the December decision. We think risks over the next 12 months are tilted in favour of more easing than implied by the September MPR rate path.