Norges Bank set to hike rates today

Jens Nærvig Pedersen Danske Bank A/S

Market movers today

Today's highlight is without comparison Norges Bank, where we expect a first rate hike in seven years.
The two-day informal EU summit meeting continues, which following media reports yesterday, suggests a very difficult discussion. PM Theresa May is said to have rejected EU Chief Negotiator Michel Barnier's offer.
Tonight after European close, the ECB's chief economist is due to speak on 'Challenges to monetary policy normalisation'.

Selected market news

The US 10Y yield rose further yesterday to as much as 3.09% and the 2Y-10Y yield curve has steepened to its widest level in over a month. Higher inflation expectations in the US have been a contributing factor to the recent rise in long-term US yields, which also help to explain why the USD has not followed yields higher.

Italy's Prime Minister Giuseppe Conte pledged yesterday to keep the Italian budget deficit below 2% of GDP in order to produce a 'credible' budget and ensure investor confidence in Italy's public finances. He thereby dismissed a call from the Five Star Movement for a budget deficit as large as 2.5% of GDP.

US crude oil inventories declined another 2mb last week. The news pushed oil prices higher, but mainly impacted the price on WTI crude, which rose above USD71/bbl, while the price on Brent crude is holding steady at close to USD80/bbl.

US President Trump plans to nominate Nellie Liang to one of the vacant seats on the Federal Reserve Board of Governors. She is currently a senior fellow at Brookings Institutions, but has previously led the Federal Reserve's Board division in charge of financial stability policy and research. The Federal Reserve Board under Chair Jerome Powell is beginning to take shape, as Richard Clarida was confirmed as Vice Chairman at the end of August.

The US and Canada continued talks on a new NAFTA deal yesterday and hinted that some progress is being made. Talks are set to continue today.

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Jens Nærvig Pedersen

Danske Bank A/S

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