Norges Bank: Markets slowly price in a June hike – Nordea Markets

In view of Nordea Markets analysis team, the market is now slowly starting to acknowledge that Norges Bank may opt to hike again in June, even reluctantly so.

Key Quotes

“Ahead of the March hike the market also only slowly built up the hiking probability, and it seems as if history repeats itself ahead of June.”

“13-14 bps are now priced in to the NOK OIS curve ahead of June (slightly above 50% probability for a hike), which is almost in line with Norges Banks rate path. Hence, the scope for interest rate positive news for NOK is limited short-term. We have argued for a while to take profit in short EUR/NOK positions between 9.55-9.60 (which could also mean that the long NOK/SEK case is a little exhausted by now).”

“We are also about to enter the Norwegian dividend season, which holds considerably larger dividend payments than in 2018 (47bn versus 35bn). In particular Friday the 10th of May is a day to watch, as DNB will distribute NOK 13.2 bn of dividends.”