NORGES BANK: Bache Press Conference Starts, Don't Expect Many Signals
Dec-18 09:39
Governor Wolden Bache's press conference has started. We will monitor headlines but note that meaningful policy signals are not usually sent here.
Bache's speech is here
- "We are not in a hurry to reduce the policy rate. The forecast we are presenting today is consistent with 1-2 rate cuts next year and a further reduction to somewhat above 3 percent towards the end of 2028. As such, we do not envisage a large reduction in the policy rate ahead."
- "The krone has depreciated and is weaker than assumed in the previous Report. A weaker krone means higher imported goods inflation, which contributes to raising inflation prospects somewhat going forward."
- "Our assessment is that there is now slightly more spare capacity in the Norwegian economy than we assumed in September."
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FOREX: FX OPTION EXPIRY
Nov-18 09:38
Of note:
EURUSD 1.41bn at 1.1675 (It looks too far).
EURUSD 1.25bn at 1.1600 (wed).
USDJPY 1.35bn at 155.00 (thu).
USDZAR ~1.3bn at 17.2000/17.2800 (thu).
AUDUSD 2.28bn at 0.6550 (fri).
- EURUSD: 1.1600 (488mln), 1.1605 (457mln), 1.1630 (578mln), 1.1675 (1.41bn).
- USDJPY: 155.00 (240mln), 155.50 (528mln).
- AUDUSD; 0.6400 (918mln), 0.6500 (318mln), 0.6600 (729mln).
- EURSEK: 10.9500 (319mln).
- EURNOK: 11.7500 (494mln).
EGB OPTIONS: Bund Call Spread
Nov-18 09:36
RXG6 132.50/134.00cs, bought for 9 in 2k.
STIR: Citi Recommend SFIH6/Z6 Flattener
Nov-18 09:24
Citi have recommended entering a SFIH6/Z6 flattener at -17.0bp, targeting a move to -50.0, with a stop set at 0bp.
- They view the BoE easing cycle as “likely having 3 phases. The first was the regular quarterly rhythm for the first 5 cuts. The second - which is the current - is a risk management phase of slower, irregular cuts awaiting more evidence that disinflation is on track. The third, we suspect, will be cuts to a lower terminal rate than priced, informed by lacklustre growth (impeded by a long list of small tax hikes and ongoing political/fiscal uncertainty), with mounting evidence of growing slack in the labour market, and with CPI realizing close to target later in 2026”.
- They believe that the second/current phase is “fairly priced”, and the “potential third phase that offers the best risk-reward”.
Fig. 1: SONIA Mar '26/Dec '26 Spread (SFIH6/Z6 Spread)
Source: MNI - Market News/Bloomberg Finance L.P.
