EMISSIONS: Latvia Delays Implementing EU ETS Requirements

• Treasuries are extending lows at the moment, no particular headline or Block driver as many ply the sidelines ahead of CPI/PPI data next two sessions.
• Currently, the Dec'25 10Y trades -10 at 113-07.5 (yld 4.0856 +.0458) -- Initial firm support to watch is 112-11+, the 20-day EMA.
• Curves bear flattening: 2s10s -0.971 at 54.171, 5s30s -0.249 at 112.703.
• US$ gaining, BBG index BBDXY currently +1.51 at 1200.06 vs. 1196.69 post data low.

Norwegian August inflation is due tomorrow at 0700BST/0800CET. Together with Thursday’s Q3 Regional Network Report, the data will be key in determining whether Norges Bank can deliver another 25bp cut on September 18.

• At its June and August decisions, Norges Bank Governor Wolden Bache said that the June MPR rate path was consistent with “one or two” more rate cuts this year (with implied probabilities skewed towards the quarterly MPR meetings in September and December). These comments keep the door open to a rate hold in September if this week’s data surprise in a hawkish direction – a risk markets may be underappreciating at present.
• Norges Bank’s June MPR projections for CPI-ATE are on track after two consecutive 3.1% Y/Y prints in June and July. In August, there are downside risks to the 3.1% Y/Y Norges forecast due to a reduction in child daycare prices in the 2025 Revised National Budget. From Norges Bank’s August monetary policy assessment: “Child daycare prices were reduced from 1 August 2025 and will thus be lower than assumed in the June Report. The reduction in child daycare prices will lead to lower 12-month inflation in the coming year and a modest improvement in household purchasing power but will probably have little impact on inflation further out”. That suggests Norges Bank are happy to look through the temporary policy change.
• The median analyst expects CPI-ATE inflation at 2.9% Y/Y in August, with forecasts ranging from 2.8-3.1%. A 3.1% Y/Y reading probably isn’t enough to derail a September cut just yet, but any higher and we think doubts should be increased - particularly if the Regional Network Survey is also hawkish.
• Alongside the daycare price impact, analyst previews we have seen generally expect a softening in food and rent inflation in August.
• Headline inflation is seen accelerating on an electricity base effect to 3.5% Y/Y (vs 3.3% prior), in line with Norges Bank projections. 

Senior European Commission energy analyst gives his view on medium-term energy market trends.-- On MNI Policy MainWire now, for more details please contact sales@marketnews.com