Weekly bulletin 9 September 2024
This week’s highlights are the publication of August tourist figures and registered unemployment, both set for release tomorrow. Last week, the minutes of the last rate decision meeting of the Monetary Policy Committee (MPC) were published. The MPC was unanimous in its decision to keep the policy rate unchanged, unlike the previous three meetings, at which one Committee member voted to lower rates by 0.25 percentage points.
9 September 2024
The week ahead
- Tomorrow, the Icelandic Tourist Board releases departures from Leifsstöð International Airport in August and the Directorate of Labour publishes registered unemployment for the same month.
- On Wednesday, inflation figures will be published for the US.
- The European Central Bank (ECB) announces its interest rate decision on Thursday.
- Measurements for the September Consumer Price Index take place this week, with Statistics Iceland publishing the CPI on Tuesday, 27 January.
Image of the week
A total of 270 persons received their notice in major collective redundancies in August, in accordance with information from the Directorate of Labour. The redundancies are in the travel sector, computer manufacturing, manufacturing of equipment for food producers, and in construction. Since 2021, major collective redundancies have only once been higher, when 441 persons received their notice in May this year. The collective redundancies in May and August may indicate a cooling off in the economy and as most of the redundancies become effective later this fall, they may fuel unemployment going forward.
Highlights of the previous week
- According to the minutes of the MPC’s meeting, the decision to maintain unchanged rates in August was unanimous. At the previous three meeting, the then Deputy Governor for Financial Stability voted to lower rates by 0,25 percentage points. In our opinion, the tone of the MPC’s statement has become stricter, reducing the likelihood of interest rate cuts this year. The MPC discussed that “it could prove necessary to maintain a tight monetary stance for longer than would otherwise be necessary”, that the MPC considered it “difficult to curb demand in view of persistent wage rises and increased transfers from the Government”, and that “it could be difficult to bring inflation back to target within an acceptable time frame without a substantial slowdown in the economy”.
- In the second quarter, the current account deficit was ISK 34 billion. These results are much worse than for the same period last year, when there was a slight surplus. The main difference is a contraction in the surplus on the services balance as a result of a slacker quarter for the travel sector, and an increase in the trade balance deficit. The surplus on factor income decreased and the deficit on current transfers grew by ISK 2 billion.
- Reykjavík, Kópavogur and Garðabær published six-month results.
- Arion Bank sold ISK-denomicated bonds, Íslandsbanki offered covered bonds, Landsbankinn sold NOK and SEK-denominated bonds, Fossar Investment Bank auctioned bills, Alma íbúðarfélag auctioned bills and Government Debt Management auctioned Treasury notes.
- Icelandair released August load figures.
Statistics and market data
Disclaimer
This review and/or summary is marketing material intended for information purposes and not for business purposes. This marketing material does not contain investment advice or independent investment analysis. The legal provisions that apply to financial advice and financial analysis do not apply to this content, including the ban on transactions prior to publication.Information about the prices of domestic shares, bonds and/or indices is source from Nasdaq Iceland - the Stock Exchange. Landsbankinn’s website contains further information under each individual equity, bond class or index. Information about the prices of non-domestic financial instruments, indices and/or funds are sourced from parties Landsbankinn considers reliable. Past returns are not an indication of future returns.
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