No change from Norges Bank today

Market movers today

We do not expect any changes to Norges Bank's policy rate today, as it will be one of its smaller interim meetings (for more details see the Nordic Macro and Markets section).

Neither should the Bank of England meeting bring any new policy signals, but keep an eye on the updated growth and inflation forecasts to be released. What is most interesting is whether we will get any new guidance on QE, which is set to expire by the end of the year.

More interesting could be the UK local elections. Especially the outcome of the Scottish election could have important implications for the likelihood of another Scottish independence referendum and trigger some volatility in the GBP.

Central bank speakers from the ECB (Lagarde, Schnabel) and Fed (Williams, Mester, Kaplan) round off the day.

The 60 second overview

Macro: Too early to change US monetary policy: Some of the more hawkish members of the Fed's policy board like Eric Rosengren and Loretta Mester of the Boston and Cleveland Federal Reserve Banks respectively, yesterday downplayed the risk of excess inflation and the need to begin tapering of the Fed asset purchase programme.

US service sector activity strengthening: In the US, the services output PMI rose to a record level in April, while the ISM services business activity index stepped back from its all-time high in March but remained at an elevated level. These indicators suggest strong growth in the US economy in the second quarter bolstered by a combination of reopening dynamics and fiscal stimulus.

Equities: Equities in a little comeback yesterday but still with very mixed regional and sector performance. The benefit from price pressure and supply shortage once again outperforming the group of tech, momentum and long duration. Value extended the streak of outperformance of growth to 7 days with an aggregated outperformance of 4%. Europe outperformed US by almost 2% after the underperformance Tuesday. US indices: Dow Jones -0.3%, S&P500 +0.1%, Nasdaq -0.4% and Russell 2000 -0.3%. Asian equities mixed this morning as Japan and mainland China resume trade. US and European futures are flat.

FI: European bond yields rose yesterday, led by periphery. After a 3bp sell-off in the morning with 10y German bund yields touching -0.21%, the afternoon recorded a small setback to end around -0.225%., i.e. 1bp higher on the day as a whole. Peripheral spreads widened led by Italy (with the exception of Greece), while semi-core spreads to Germany tightened marginally. Greece saw the biggest performance after a 5y bond syndication that recorded strong investor demand in excess of EUR20bn for the EUR3bn volume.

FX: In a fairly unusual price action yesterday NOK did not join the camp of commodity winners in CAD, AUD, ZAR and not least NZD. EUR/USD, EUR/GBP and EUR/SEK were all little changed.

Credit: Credit paired some of Tuesday's losses yesterday where iTraxx Xover tightened 3bp (to 251bp) and Main ½bp (to 50bp). Gains were more modest for cash bonds where both IG and HY closed only marginally tighter.

Nordic macro and markets

We expect Norges Bank to keep the policy rate unchanged at 0.00 %. This is an interim meeting with no accompanying monetary policy report or press conference, only a brief press release. At the full meeting in March, the bank signaled the first rate hike in H2, and that it was 50/50 whether this would be in September or December. Developments since then have pulled in different directions, but the overall picture is unlikely to have changed sufficiently for the bank to depart from the "plan" communicated in March.