US DATA: PPI Contributions To PCE Look On Firm Side

• +5,000 FVU6 106-07.5, post time offer at 0824:24ET, DV01 $209,250.
• The 5Y contract trades 106-08 last (+1)

Norges Bank’s certificates programme has ramped up through the summer, with outstanding volumes now close to the 2026 target levels. Volumes are currently NOK73bln, and will fluctuate between NOK70-79bln through the remainder of the year - see Chart 4 below.

• Certificates have been introduced as another instrument (alongside F-deposits) to absorb excess liquidity from the banking system, helping Norges Bank maintain its NOK30-40bln target range for total liquidity.
• Based on Norges Bank’s current forecast (as of yesterday), certificates are expected to pull down the troughs in structural liquidity to near zero later this year – see Chart 1. This may necessitate usage of F-loans to supply liquidity to the banking system in order to push total liquidity back into the target range.
• The current forecast for structural liquidity in the autumn (September – November) is a little lower than the forecasts made earlier this year - see Chart 2.
• Over the next 3 months, structural liquidity (ex-certificates) is expected to average just over NOK70bln.
• SEB believe the current level of 3M Nibor-OIS (just over 18bps as of Aug 10 close) is “slightly compressed given the low level of expected liquidity the next 3 months”. They “still think there’s a potential for renewed increases in the spread in September and October, driven by lower structural liquidity and its effect on the FX-OIS basis.” 

• Weekly ADP employment growth continued its moderating trend as it eased to an average 8.25k weekly increase over the four weeks to Jul 25.
• It’s the softest since January having cooled from a high of 40.75k in early May.
• The monthly equivalent of 33k ticks down from the 44k the previous week in an update that matches last week’s main monthly report for July (as always based on a reference period including the 12th day of the month).
• Today’s weekly update as usual doesn’t offer any sector details here but it’s worth recalling last week’s monthly update showed continued reliance on the non-cyclical education & healthcare sector (accounting for 36k of the 44k private sector job creation after 48k of 95k in June).
• As such, non-education and healthcare sectors added only 8k jobs in July after a more encouraging run averaging 52k per month through Apr-Jun. This is back to the pace seen in Feb-Mar although still better than the -22k per month averaged through Jan 2025 - Jan 2026.