NORGES BANK: Hawkish Undertones Of Decision Starting To Dominate Market Reaction
While the knee-jerk reaction to today’s Norges Bank decision was dovish (with the 25bp rate cut not fully priced), the hawkish undertones of the guidance and updated rate path are starting to dominate.
- 2-year NOK swap rates are now up 5bps on the session at 4.02%, marking a substantial 12bp reversal from the post-decision low of ~3.90% (prices according to Bloomberg Finance L.P).
- Meanwhile, EURNOK is close to session lows, -0.15% today at 11.5849. Initial support at the Sep 15 low (11.5387) remains untested.
- Looking at the main forecast revisions within the September MPR, the main thing to note is the update to the output gap. Following signs of resilient domestic demand and a rise in mainland productivity, output is now assumed to be close to potential.
- A reminder that Norges Bank upgraded its potential output estimate in the June MPR, and this message was re-iterated in the September MPR.
- Norges Bank expects a negative output gap to open back up from the middle of 2026 before starting to close again from 2028. This reflects the bank's view that the recent increase in productivity growth is assumed to be temporary. The negative output gap also highlights why a downward sloping policy rate path (albeit shallower than assumed in June) is still warranted.
- The Governor’s press conference has just concluded, and she unsurprisingly avoided providing any near-term rate signals.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
GILT AUCTION RESULTS: 1.125% Sep-35 linker
| 1.125% Sep-35 Linker | Previous | |
| Amount | GBP1.60bln | GBP1.70bln |
| Avg yield | 1.728% | 1.588% |
| Bid-to-cover | 3.10x | 3.35x |
| Avg price | 94.440 | 95.668 |
| Pre-auction mid | 94.413 | 95.639 |
| Previous date | 22-Jul-25 |
COMMODITIES: Moving Average Studies for Gold Remain in Bull-Mode Position
WTI futures remain in a clear bear cycle and the contract is trading closer to its recent lows. A key support at $61.99, the Jun 30 low, has been breached, strengthening a bearish theme. A continuation lower would open $57.71, the May 30 low. Key short-term resistance has been defined at $69.36, the Jul 30 high. Clearance of this level would cancel a bear theme. Initial resistance to watch is $64.00, the 50-day EMA. A bull cycle in Gold remains intact and this is highlighted by moving average studies that remain in a bull-mode position. The sideways trend that has been in place since the Apr peak appears to be a corrective phase - a pause in the uptrend. A resumption of gains would open $3439.0, the Aug 23 high. Key resistance and the bull trigger is at $3500.1, the Apr 22 low. On the downside, first support to watch lies at $3268.2, the Jul 30 low.
- WTI Crude down $0.59 or -0.93% at $62.79
- Natural Gas down $0.02 or -0.55% at $2.874
- Gold spot up $6.16 or +0.18% at $3338.61
- Copper up $0.8 or +0.18% at $454.4
- Silver up $0.04 or +0.1% at $38.053
- Platinum up $15.02 or +1.13% at $1345.32
EQUITIES: Eurostoxx 50 Futures Remain Close to Recent Highs
A bullish theme in Eurostoxx 50 futures remains intact and the contract is trading closer to its latest highs. The print above the May and July highs strengthens a bull theme and signals scope for a climb towards 5575.00, the Mar 3 high (cont) and key resistance. Moving average studies remain in a bull-mode position, highlighting an uptrend. Support to watch lies at 5349.70, the 50-day EMA. The dominant uptrend in S&P E-Minis remains intact and the contract is trading at its recent highs. Moving average studies are in a bull-mode position, highlighting a clear uptrend. A resumption of gains would pave the way for a climb towards 6523.63, a Fibonacci projection. On the downside, supports to watch are; 6399.62, the 20-day EMA, and 6275.78, the 50-day EMA.
- Japan's NIKKEI closed lower by 168.02 pts or -0.38% at 43546.29 and the TOPIX ended 4.33 pts lower or -0.14% at 3116.63.
- Elsewhere, in China the SHANGHAI closed lower by 0.739 pts or -0.02% at 3727.288 and the HANG SENG ended 53.95 pts lower or -0.21% at 25122.9.
- Across Europe, Germany's DAX trades higher by 46.78 pts or +0.19% at 24362.06, FTSE 100 higher by 15.81 pts or +0.17% at 9173.73, CAC 40 up 43.98 pts or +0.56% at 7927.86 and Euro Stoxx 50 up 24.22 pts or +0.45% at 5458.94.
- Dow Jones mini down 5 pts or -0.01% at 44981, S&P 500 mini down 6 pts or -0.09% at 6463.5, NASDAQ mini down 21.75 pts or -0.09% at 23776.75.
