Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Access both platforms from your single Saxo account.
FX Update: NOK to break higher on massive stimulus?
John J. Hardy
Chief Macro Strategist
Summary: Norway has just announced an enormous stimulus package that could see a strong rise in the Norwegian krone, a currency beaten down by the drastic fall in crude oil prices on the Covid19 outbreak. The massive stimulus will mean a massive purchase of local currency and could see the NOK detach from its myopic focus on crude oil for a time.
Norway is perhaps the best positioned country in the world for a major stimulus package, given its massive petroleum fund and the general propping up of asset markets that other central bank have provided to keep assets in the fund relatively liquid and from crashing. The Norwegian government has decided to strike while the iron is hot, announcing a huge NOK 480 billion NOK package (over 13% of 2019 Norwegian GDP, but multiples higher of 2019 “Mainland GDP” which attempts to separate the rest of the economy from the oil and gas industry – a bit of an exercise in vain, but offers perspective.)
Regardless, it is a big package and the interesting twist here is that the Norwegian government has the luxury of financing a good portion of the stimulus through asset sales and income from the fund rather than via debt financing, with over 80% of the programme to be funded in this manner. As the Norwegian krone has run so much lower on the sell-off in crude oil, the asset sales will go farther in NOK terms and NOK could have a look higher on this massive fiscal push to address the Covid19 fallout as the asset sales will mean massive new purchases of NOK to stimulate the economy.
Chart: EURNOK
EURNOK has found support just above 11.00 in recent consolidation and appears to be threatening that support area once again here today. Note that the lowest daily close fore EURNOK since the crisis-fed spike in NOK weakness was around current levels of 11.05, so we are currently looking at key support, though psychologically a break of the 11.00 level would prove perhaps more impressive for opening up a possible move toward the 200-day moving average way down at 10.37. Stay tuned, and beware that any new sell-off in crude oil could offer a headwind for NOK bulls in the background.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)