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NOK: Hard for housing to outperform Norges Banks view – Nordea Markets

Analysts at Nordea Markets suggest that in the current global environment, the market will likely continue to be reluctant to price in the hike in March from Norges Bank for another while.

Key Quotes

“Usually we would expect January-April to be a NOK positive period, due to the tightening structural NOK liquidity. This will probably also be the case in 2019, but there are downside risks to the view of Norge’s Bank on at least a couple of parameters.”

“In the December monetary policy report, Norge’s Bank keeps looking for a 2% annual increase in house prices in 2019. Given the signals send from the inventory-to-sales ratios this will be a difficult threshold for Norwegian house prices to beat in 2019.”

“We have been looking for higher EUR/NOK into year-end over the past weeks and it seems like EUR/NOK is slowly getting there. 9.80-9.85 is within reach before we “close our books” for the year and one should watch out for the F-Loan auction the 31st of December – last year the year-end F-loan auction caused a temporary dip in the NIBOR of 10 bps. Again, we tend to think that the combo of i) The tighter market liquidity, ii) The abundancy of structural liquidity (excess liquidity) will weaken NOK just before and after Christmas.”

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