STIR: Just Under 60bp Of BoE Cuts Priced Through Year-End

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.

• A wide range session in FX after US President Trump once again threatens 25% Tariffs, but this time on everyone and on all Steel and Aluminium Imports.
• Price action in metals overnight have been steady, but Gold continues to register all Time record high, clearly some Safe Haven interest must be at play.
• For G10 FX, going into the European session, the CAD was the Overnight worst performer, was down 0.37%, albeit well within Friday's wide range following the US Data beat, but has been taken over by the Yen, with USDJPY back above 152.00, although there's very little movements in Yields.
• USDJPY printed a 152.21 high overnight, and this will be seen as the initial immediate resistance, now at 152.06.