EM CEEMEA CREDIT: Hungary to introduce price cap on supermarkets

U.S. tariff headlines dominated over the weekend, providing some modest dovish readthrough for GBP STIRs this morning.

• Elsewhere, January’s KPMG/REC Report on Jobs provided another downbeat assessment of the UK labour market.
• BoE-dated OIS little changed to ~3bp more dovish across ’25 contracts, showing 6bp of cuts for March, 26bp through May and 59.5bp through year-end.
• Goldman Sachs believe that “the Bank’s “gradual and careful” approach to cuts suggests a March cut is unlikely, although there is likely asymmetry to June pricing given potential downside growth risks both from domestic data and from the imposition of global tariffs (although it’s likely the UK will be largely spared from country-specific tariffs).”
• SONIA futures +0.5 to -1.0.
• Little of note on the UK calendar today, with comments from BoE Governor Bailey & MPC member Mann (after her dovish pivot) eyed on Tuesday.

Norwegian January CPI-ATE was above Norges Bank’s December MPR projection (2.8% Y/Y vs 2.6% expected, 2.7% prior). However, the upside surprise appears driven by food and goods inflation, rather than services. This should support expectations for a gradual Norges Bank easing cycle this year.

• Food prices rose a solid 2.3% M/M (above the 2000-2019 avg of 0.4%), corresponding to an annual rate of 5.0% Y/Y (vs 4.0% prior), the highest since May 2024.
• While clothing and footwear inflation eased to -1.2% Y/Y (vs 0.2% prior), the monthly rate of -6.7% M/M was above the -9.1% 2000-2019 avg. Furniture and household goods inflation also accelerated to 1.1% Y/Y (vs 0.5% prior).
• Overall domestic goods inflation was 4.9% Y/Y (vs 4.7% prior), while imported goods was 1.2% Y/Y (vs 0.9% Norges Bank projection, 0.5% prior).
• Meanwhile, services inflation softened. Healthcare, transport, communications and restaurants/hotels saw smaller-than-usual monthly inflation readings.
• Overall services inflation was thus 3.2% Y/Y (vs 3.8% prior). Rents  - a key source of inflation stickiness through 2024) eased to 4.2% Y/Y (vs 4.5% prior), meaning services-ex rent was 2.4% Y/Y (vs 3.3% prior).
• Statistics Norway has now started publishing index values for “Services where labor dominates ex regulated prices”, which was 4.7% Y/Y in January (vs 4.8% prior). This will be a useful metric to see how fast easing wage pressures are feeding through into core inflation.
• Headline CPI was 2.3% Y/Y (vs 2.2% cons and prior, 2.3% Norges Bank). Electricity prices rose 1.9% M/M, corresponding to an annual rate of -9.8% Y/Y (vs 10.9% prior). Liquid fuel inflation was 8.7% M/M and -4.7% Y/Y (vs -5.8% prior). 

• RES 4: 6178.75 High Dec 6 and key resistance    
• RES 3: 6162.25 High Jan 24 
• RES 2: 6147.75 High Jan 31 
• RES 1: 6123.25 High Feb 7                  
• PRICE: 6065.00 @ 07:26 GMT Feb 10 
• SUP 1: 6014.00/5935.50 Intraday low / Low Feb 3           
• SUP 2: 5892.37 76.4% retracement of the Aug 5 - Dec 6 bull leg
• SUP 3: 5842.50 Low Jan 14 
• SUP 4: 5809.00 Low Jan 13 and a key resistance 

The Feb 3 initial sell-off in the S&P E-Minis contract and the breach of support at 5948.00, Jan 27 low, continues to highlight a possible S/T reversal threat. If correct, it suggests that the latest bounce is a correction. A resumption of weakness would open 5892.37, a Fibonacci retracement point. On the upside, a stronger rally would expose key resistance at 6178.75, the Dec 6 ‘24 high. Clearance of this hurdle would resume the primary uptrend.