NORGES BANK: MNI Norges Bank Review - Dec 25: Not In A Rush
Dec-19 13:02
FOR THE FULL PUBLICATION PLEASE CLICK HERE
EXECUTIVE SUMMARY:
- Norges Bank held the policy rate at 4.00% as unanimously expected, and continued to guide that “the 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 policy statement re-iterated that Norges Bank is “not in a hurry to reduce the policy rate”, with restrictive policy still needed to bring inflation back towards the target.
- The December MPR rate path saw a smaller downward revision than had been expected by analysts, prompting a modest hawkish reaction in NOK markets
- The revised rate path was consistent with 1-2 rate cuts next year, according to Governor Wolden Bache.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
GILT PAOF RESULTS: The PAOF for the 4.75% Oct-35 Gilt was not taken up.
Nov-19 13:02
- GBP1.125bln have been on offer.
- This leaves GBP23.000bln of the gilt in issue.
CROSS ASSET: Bonds Draw Support From Downtick In Crude
Nov-19 12:52
Weakness in crude oil futures has supported bonds over the last couple of hours or so, although pre-existing week-to-date highs in TY, Bund & gilt futures remain untouched.
- Our commodities team notes that oil has softened as the market digests signs of renewed efforts by the U.S. to strike a Ukraine peace deal, although caution that given failed previous attempts, a deal still seems a long way off.
US DATA: Mortgage Applications Reverse Refi Uptick
Nov-19 12:48
Mortgage applications last week fully unwound what had been a strong refi-driven increase seen back in late October when rates fell to their lowest in over a year. Rates have only increased modestly in recent weeks whilst mortgage swap spreads have seen a narrowing trend barring a small widening in the latest week.
- MBA composite applications fell a seasonally adjusted -5.2% last week, now fully unwinding a strong increase in late October with its largest single week decline since September.
- Refis led the latest drop (-7.3% after -3.4%) and are now at their lowest level since early September, whilst new purchase applications dipped after a previously strong increase (-2.3% after +5.8%).
- Levels relative to 2019 average for context: composite 66%, new purchases 65%, refis 67%.
- The 30Y conforming mortgage rate inched up another 3bps to 6.37% to continue a slow lift off the 6.30% from the week to Oct 24 being its lowest since Sep 2024.
- There was a minor widening in mortgage spreads but it doesn’t materially alter the trend of reasonable tightening in recent months.
- Specifically, the spread to 10Y swap rates ticked up 2bps to 269bps although last week’s 267bp had been a fresh low since Apr 2022. It compares to an average 285bp in Q1 and a rough range of 300 +/-5bp for some months after reciprocal tariff announcements in April prompted some additional caution in lending standards.
