EMISSIONS: Germany Could Cut 65 mn/t CO2 Annually by Restarting Nuclear Plants

The Richmond Fed's regional manufacturing survey bucked the softening trend seen elsewhere, with the headline index picking up for the 3rd consecutive month to positive 6, vs -4 prior. But expectations fell back sharply.

• That was the first positive reading since October 2023 and the highest outright since April 2022. Shipments jumped to 12 from -9, with new orders up to 0 from -4 and employment to 9 from 3.
• But in sharp contrast to stronger current conditions, we note that expectations for future local business conditions collapsed to a 5-month low 2 from 32 prior, with new orders, backlogs, and capex expectations all moving lower.
• Expected and current prices paid/received mostly ticked higher but weren't as noteworthy as jumps in other regional Fed surveys.
• It seems as though post-election expectations were too optimistic with current conditions potentially having been depressed by hurricane activity in the region in the fall.
• Overall it's hard to read the signals for early 2025 activity but expectations are still elevated versus the last couple of years even after the drop, and it does appear that there will be at least some pickup vs very weak conditions in late 2024.

This afternoon’s pullback in crude oil and natural gas futures (the former in response to the weaker-than-expected US consumer confidence reading) has weighed on the Norwegian krone. NOKSEK is down 0.5% today (now at its lowest since August 5th), narrowing the gap to key multi-year support at 0.9500.

• This level has contained downside in tthe cross on three occasions since March 2023, and also provided strong support back in 2016.
• A clear breach of 0.9500 would signal scope for a deeper retracement towards 0.9274, the June 2020 low.
• Meanwhile, SEK continues to outperform the G10 basket, trading resiliently despite today’s European equity volatility.
• Tomorrow’s Scandinavian calendar includes tier 2 data (Swedish PPI and Norwegian credit growth). 

Figure 1: NOKSEK Weekly Chart

• +5,000 SFRK5/SFRM5 95.68/95.75/95.81/95.87 put condor strip, 2.5 ref 95.915