NORWAY: Solid Labour Market Conditions Should Keep Norges Bank Cautious
With labour market data showing no signs of deterioration and CPI-ATE inflation still above target, this may keep Norges Bank cautious with respect to future cut guidance at next week’s May 8 decision (rates will almost certainly be held at 4.50%). On April 8, Norges Bank Governor Wolden Bache said that “our interpretation of Norges Bank’s mandate is that considerable weight shall be given to employment – also at times when inflation deviates significantly from the target”.
- The Norwegian unemployment claims rate was 2.0% in April, a touch below the 2.1% expected and prior. However, NAV notes that the figures are not comparable with previous months, due to the introduction of a new jobseeker register amongst other changes to the statistics. As such, there is also no seasonally adjusted series published this month.
- Nevertheless, the NSA data suggests little change in registered unemployment conditions in April, broadly consistent with the March LFS data released earlier this week. Including those on government job schemes, the unemployment rate was 2.6%.
- NAV notes that “during April, 58,900 vacancies were registered on sjørværsten.no. This corresponds to 2,600 per working day, and is an increase of 11 percent compared to April last year. The figures for vacancies are not affected by the break in the unemployment statistics”.
- However, we note that the March LFS data showed a -0.8% M/M fall in employment.
- Although Norway is impacted by US tariffs via weaker global growth prospects (particularly via the offshore channel), it is less directly exposed than the likes of Sweden. This reduces the urgency of immediate policy action.
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BUNDS: Tariff annoucement is at at the forefront
- A small overnight gap lower for Bund, but the contract looks to close it into the cash Open, this was back up to 129.33, printed a 129.32 high so far.
- Further out, initial resistance was seen at 129.54 this Week, and the German 10yr printed a 129.59 high on Monday and 129.60 Yesterday, this 129.54/129.60 area remains the first resistance.
- Support is still seen at ~128.42.
- ALL EYES will be on Trumps Tariff's announcement now set for 16.00ET, and the subsequent retaliation Risks.
- Invertors will look for Upside risks in futures very short term, given the Global growth concerns, but the latest set of Data could point towards Stagflation going forward.
- Today on the Data front, sees US ADP, Factory orders, final Durable Goods, but unlikely to really move the needle ahead of President Trump.
- SUPPLY: UK 10yr Linker (won't impact Gilt), Germany €4.5bn Bund (Equates to 37.3k Bund) could weigh into the bidding deadline.
- SPEAKERS: ECB Schnabel, Escriva, Holzmann, Lane, Fed Kugler, President Trump (at 16.00ET/21.00BST).
BRENT TECHS: (M5) Bull Cycle Extends
- RES 4: $78.96 - High Jan 15 and a reversal trigger
- RES 3: $77.75 - High Jan 20
- RES 2: $76.26 - High Feb 20 and a bull trigger
- RES 1: $75.29 - High Apr 1
- PRICE: $74.40 @ 07:08 BST Apr 2
- SUP 1: $72.29 - 20-day EMA
- SUP 2: $69.51/67.95 - Low Mar 19 / 5 and the bear trigger
- SUP 3: $67.87 - Low Sep 10 ‘24 and a key medium-term support
- SUP 4: $66.55 1.618 proj of the Jan 15 - Feb 4 - 20 price swing
A strong rally in Brent futures Monday strengthens the current short-term bullish theme and undermines a medium-term bearish condition. The contract is trading at its recent highs and this signals scope for a climb towards the next key resistance at $76.26, the Feb 20. Clearance of this level would strengthen the bullish condition. Initial firm support to watch lies at $72.29, the 20-day EMA.
STIR: SFRM5 96.125/50 Call Spread Blocked
SFRM5 96.125/50 call spread 5K blocked at 3.75, CME indicates buyer initiated, conducted across 2x 2.5K blocks.
