NORWAY: Pay Growth Important To Determine If 2x25bp H2 Cuts Can Be Delivered
Norwegian Q2 average monthly basic earnings rose 5.3% Y/Y, up a touch from 5.2% in Q1. It’s one of several published measures of Norwegian pay growth, which each come from different Statistics Norway surveys and can exhibit considerably monthly/quarterly volatility. Q2 national accounts are due next Thursday. Alongside the usual mainland GDP breakdown, the data will provide an update on wage tracking for the first half of this year. With Norges Bank remaining non-commital at yesterday's decision, a scenario where only one more cut is delivered this year (compared to consensus of 2x25bp cuts) should not yet be ruled out. Firm wage growth may be one hawkish contributor leading to such an outcome.
- Norges Bank forecast average annual nominal earnings in its MPR projections. These data are only released annually and printed at 5.6% in 2024 (above the central bank’s 5.2% projection). Norges Bank expect annual earnings to ease to 4.5% for 2025 as a whole.
- In Q1, Y/Y wages and salaries growth from the national accounts was 4.5% (vs 4.6% in Q4). However, other metrics of pay (e.g. from the LFS) point to slightly firmer wage pressures.
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GILT TECHS: (U5) Fresh Short-Term trend Low
- RES 4: 93.41 High Jul 2
- RES 3: 93.00 Round number resistance
- RES 2: 92.79 High Jul 4
- RES 1: 92.22/24 20-day EMA / HIgh Jul 15
- PRICE: 91.36 @ 08:12 BST Jul 16
- SUP 1: 91.25 Intraday low
- SUP 2: 91.16 Low Jun 2
- SUP 3: 90.97 76.4% retracement of the May 22 - Jul 1 bull leg
- SUP 4: 90.59 Low May 29
A bear cycle in Gilt futures remains in play and Tuesday’s volatile bearish session reinforces this theme. The contract has recently breached support at 91.63, the Jul 2 low. Price has also traded through 91.50, the 61.8% retracement of the May 22 - Jul 1 bull leg. The move down exposes 90.97, the 76.4% retracement point. Clearance of this level would strengthen a bearish theme. Initial firm resistance is at 92.29, the 20-day EMA.
SILVER TECHS: Bullish Trend Condition
- RES 4: $40.285 - 1.618 proj of the Apr 7 - 25 - May 15 swing
- RES 3: $40.000 - Psychological round number
- RES 2: $39.655 - 1.500 proj of the Apr 7 - 25 - May 15 swing
- RES 1: $39.132 - High Jul 14
- PRICE: $37.9133 @ 08:15 BST Jul 16
- SUP 1: $36.750 - 20-day EMA
- SUP 2: $35.531 - 50-day EMA
- SUP 3: $33.967 - Low Jun 3
- SUP 4: $32.615 - Low May 22
Trend conditions in Silver are unchanged, a strong impulsive bull cycle remains intact and recent gains reinforce current conditions. The metal on Jul 11 cleared key short-term resistance at $37.317, the Jun 18 high. This confirms a resumption of the uptrend and sights are on the $39.655 next, a Fibonacci projection. On the downside, initial support to watch lies at $36.750, the 20-day EMA.
SWAPS: Citi Recommend SONIA 3m 10s30s Conditional Bull Steepener
Citi recommend a SONIA 3m 10s30s conditional bull steepener in costless format.
- They highlight ongoing macro and fiscal uncertainty as the driver of this view.
- They look to “take advantage of the (slightly) negative forward-spot roll as well as the positive vol pick-up to forwards to establish 10s30s steepeners via receivers. The curve’s positive carry should also prove valuable in a scenario where the BoE delivers just (or less than) what’s priced in, keeping rate volatility in check”.
