Erica Dalstø

Chief Strategist at SEB Norway covering Scandies (SEK & NOK), Nordic bond markets, macro etc.

[Erica Dalstø @SEK_bonds]

Norges Bank on hold at 4.50% and reiterates guidance for a March cut, as widely exp. Very little info given, if any 1) no opening to refrain from March cut implies it shd be a done deal, 2) outlook is more uncertain, ie rate outlook (beyond March) more uncertain.

[Erica Dalstø @SEK_bonds]

Finally a positive Norwegian inflation surprise; CPI-ATE surprising dropped 0.1ppt in the y/y rate to 6.3% in August. Prices across the board slightly lower-than-expected - surely a relief for Norges Bank

[Erica Dalstø @SEK_bonds]

Norges Bank hiking by 25bps to 4.00% as widely expected. Guiding towards another hike in September and reiterating both the up- and downside risk scenarios => neutral risk outlook => June rate path still alive

[Erica Dalstø @SEK_bonds]

Norwegian core inflation rising to 6.2% from 5.9% y/y, in line with consensus and Norges Bank's estimate. Food prices remain dampened by tough competition, but broad upside pressures from other goods and services. electricity prices pushed headline CPI higher to 6.5% y/y.

[Erica Dalstø @SEK_bonds]

Norges Bank stays put at 2.75% as exp, and guiding towards a rate hike in March. But emphasizes high uncertainty and data-dependence. Mkt was discounting a 20% chance of a hike prior to the announcement and a rate peak around 3.1%

[Erica Dalstø @SEK_bonds]

Just-announced: Norway to issue a new 20y bond, the regular auction scheduled for Wed is cancelled. Transaction will be launched "in the near future"

[Erica Dalstø @SEK_bonds]

Norges Bank FIFO - first in first out as the rate weapon already starts to bite. Hikes 50bps to 2.25% as exp, but less front-loading in path implying a 25bps hike in Nov, Dec and Mar-23. Peak in policy rate unch at 3.10% vs market's 3.45% pre-announcement.

[Erica Dalstø @SEK_bonds]

Riksbank +100bps to 1.75%: "Inflation is too high... Monetary policy now needs to be tightened further to bring inflation back to the target."

[Erica Dalstø @SEK_bonds]

Norwegian CPI-ATE surprised markedly on the upside, up from 3.6 to 4.5% y/y and well above Norges Bank's 3.2% estimate. Semi-annual adjustment in agriculture and food prices main explanation, but also a broad-based rise in prices on services and goods. Another 50bps hike likely.

[Erica Dalstø @SEK_bonds]

Rate path from March signaled a key rate at 1.50% by year-end, and a rate peak at 2.50%. Rising inflationary pressure should result in more front-loading implying
near 2.00% end-22 and a peak between 2.75-3.00%.

[Erica Dalstø @SEK_bonds]

Get ready for action!! Norges Bank's rate decision and MPR at 10 CET. I and consensus exp a 25bps hike, but expectations of a 50bps hike have increased in past weeks. Market discounts roughly 35bps for today's meeting.

[Erica Dalstø @SEK_bonds]

Now that's a sad picture. Higher prices on goods, food and electricity combined with rising interest rate costs and geopolitical uncertainty doing the job. This should strengthen Norges Bank's view that a gradual approach to rate hikes is necessary.

[Erica Dalstø @SEK_bonds]

Norwegian govt exp a record-large NOK 933bn net cash flow from petroleum and a transfer to the Government Pension Fund Global of NOK 630bn. This will more than cover for the withdrawals during the pandemic. As GPFG invests abroad, Norges Bank will cont selling NOK 2-2.5bn daily

[Erica Dalstø @SEK_bonds]

Swe inflation surprises on the upside with CPIF rising from 6.1% to 6.4% y/y and CPIF ex. energy from 4.1% to 4.5% y/y. Inflation is in line with Riksbank's upside risk scenario implying faster hikes than envisaged in its main rate path.

[Erica Dalstø @SEK_bonds]

Norwegian govt published key data from its revised budget: petroleum revenue spending set at 2.9% of GPFG resulting in a fiscal impulse of -0.5ppt. Mainland GDP estimated at 3.6% and reg unemployment 1.8%. Full budget published at 10.45 CET and will give details on daily FX purch

[Erica Dalstø @SEK_bonds]

Neutral message but overall higher uncertainty to the outlook as risks (up and down) appear to be rising

[Norges Bank @NorgesBank]

Norges Bank’s Monetary Policy and Financial Stability Committee has unanimously decided to keep the policy rate unchanged at 0.75 percent: https://t.co/zwnFJb3gdN

[Erica Dalstø @SEK_bonds]

Norges Bank rate decision at 10 CET. Unch policy rate at 0.75% widely exp as NB stated in March that "the policy rate will most likely be raised further in June". No new projections or rate path today, expect a neutral statement reiterating the message from the March MPR.

[Erica Dalstø @SEK_bonds]

Riksbank: "it is more uncertain than usual how inflation will develop in the near term... The risk outlook for inflation is on the upside... a higher repo rate would be required...". Upside risk scenario shows repo rate hiked to 2.50% in 2025

[Erica Dalstø @SEK_bonds]

Riksbank QE purchases will be reduced by 50% in H2, buying a total of SEK 37bn. Purchases reduced evenly across all asset classes.

[Erica Dalstø @SEK_bonds]

Riksbank hikes 25bps to 0.25% to "counteract the high inflation from becoming entrenched in price and wage-setting". Repo rate will be raised gradually going forward and that it will be somewhat below 2 per cent in three years' time