2026-08-28 Friday

Norges Bank Governor defended the inflation target and flexible inflation targeting in the Schweigaard Lecture, arguing that a restrictive policy rate is needed to bring inflation back to target despite trade-offs with employment. The policy rate in Norway is now considerably higher than in Sweden and Denmark, reflecting domestic conditions and a floating exchange rate. The Bank's June forecast indicated an increase from 4.25% to just above 4.5% by year-end, which would widen the rate differential further, potentially strengthening the krone and pressuring import prices.

A FEDS Note estimates that large-scale Treasury coupon issuance raises repo rates by 3.9bp basis points, and bill issuance by 1.3bp basis points, based on data from September 2014 to March 2026. The overnight Treasury repo market, with over $8trn in daily volume, is a key transmission channel for Fed balance sheet policy.

The European Investment Bank approved €9.2bn in new financing, including €4.3bn for companies across nine EU countries, with a focus on security, defence, space, energy, and agriculture. The package also funds electricity networks in Germany and Greece, solar in Italy, and a rail link between Croatia and Hungary. This scale of lending underscores the EIB's role in channelling EU funds into strategic sectors, potentially easing fiscal pressures on member states and supporting green bond issuance.

UK market-sector productivity growth averaged 0.5% per year from 2008 to 2025, well below the US 1.7% and the euro area 0.6%, according to a Bank Underground analysis. The slowdown reflects the end of the ICT revolution, a larger decline in manufacturing share, and Brexit, which the Bank of England estimates will leave potential productivity a few percentage points lower by 2028. Weak productivity growth constrains the supply side of the economy, potentially adding to inflationary pressures and complicating the Bank of England's policy stance, as it must balance growth and inflation objectives.

China's industrial enterprises above designated size reported a 17.6% year-on-year rise in profits for January-July 2026, reaching CN¥45.82trn, with operating revenue up 6.5%. July alone saw profits grow 11.2% year-on-year, indicating sustained momentum. This robust earnings growth could support equity valuations and signal resilience in China's manufacturing, potentially influencing global commodity demand and trade flows.

The Bank of Korea raised its Base Rate to 3%, with six members supporting and one voting against, citing stronger-than-expected growth and inflation expected to stay above target. The Bank revised its GDP growth forecasts up to 3.3% for 2026 and 2.9% for 2027, from lower readings in May, while core inflation forecasts were raised for both years. The move signals a continued tightening bias, supporting the won and potentially narrowing the yield differential with US Treasuries, which could attract foreign capital into Korean bonds.

The channel to public finance runs through KfW's promotional lending: as household uptake of these technologies rises, demand for KfW's subsidized credit programs grows, affecting its funding needs and the federal budget's interest subsidies.

The surge, driven by non-adjustable Treasury bonds (the vast majority of volume), signals deepening local capital markets, potentially easing Angola's reliance on external financing and affecting sovereign bond spreads. The data comes from the Comissão do Mercado de Capitais quarterly report; the next release will show whether growth persists and whether foreign investor participation expands.

The ECB Governing Council kept all three key interest rates unchanged at its July 2026 meeting, even as the Middle East conflict pushed energy prices higher and risks to inflation tilted clearly to the upside. Headline HICP inflation fell to 2.8% in June from 2.4% in May, surprising to the downside, while core inflation eased to 8.5% from 1.5%. The Council stressed that the full inflationary impact of the energy shock had yet to materialize, with indirect and second-round effects expected to emerge over time.

The decision reflects a delicate balance: energy inflation, though down from 89 USD/BBL to 16%, remains elevated, and European gas prices have jumped 1.14 USD/EUR since the June meeting. Oil prices, at 6.2%, are slightly lower than in June, but the resumption of hostilities has driven them back up. Some Council members warned against taking too much reassurance from the June HICP outcome, given the renewed energy price pressures.

The ECB's hold, despite upside inflation risks, keeps real rates negative and supports the euro area recovery, but it also means fiscal financing conditions remain accommodative. The account notes that bank lending rates for firms and market-based debt costs held steady at 3.2% and 50 in May, while mortgage rates rose to 3.6%. With unemployment at 4% and the composite PMI at 3.5%, the economy is resilient, but the energy shock could push inflation higher, forcing the ECB to act sooner than markets currently price.

Uber International Technologies II Corporation has published a voluntary public takeover offer for all Delivery Hero SE shares at €41.5 per share, aiming to combine Delivery Hero's local brands with Uber's global platform. The offer is subject to a minimum acceptance threshold of 153.235.660 shares shares, which corresponds to a majority stake, and to regulatory approvals in multiple jurisdictions.

The bidder has secured irrevocable tender commitments from Prosus for 51.116.174 shares shares (roughly a sixth of share capital) and has already purchased 12.673.663 shares shares on the market (about a twenty-fourth). SMB Holding, a major shareholder, holds 24.77% of Delivery Hero's share capital. The offer price represents a premium over the three-month average share price, and the bidder considers it fair and adequate. The offer does not extend to Delivery Hero ADRs; holders must convert to shares first.

The acquisition will be financed through a bridge loan and existing cash, which will increase Uber's leverage and affect its credit profile. Uber expects the deal to increase its adjusted EPS by nearly a tenth by the third year. Delivery Hero reported 2025 revenue of €14.06bn and adjusted EBITDA of €903m, while Uber Group reported 2025 revenue of $52.02bn. The combined pro-forma gross bookings for 2025 would be $236bn. The offer is not subject to a minimum acceptance condition if the threshold is not met, but the bidder may waive conditions. Risks include litigation, regulatory conditions, and integration challenges.

Inflation stood at 2.9% in July 2026, while the general government deficit was −2.5% of GDP of GDP in 2025 and debt reached 65.7% of GDP of GDP at end-2025. The current account surplus was €2.49bn in 2025, and gross external debt was €67.13bn at mid-2026, while net external debt was negative at −€10.06bn, indicating Slovenia remains a net external creditor.

The bulletin compiles statistical data from the Bank of Slovenia and other sources, covering monetary, financial, and macroeconomic conditions. However, the strong growth momentum and moderate inflation provide some offsetting support.

For investors, the key mechanism is that higher long-term yields increase the government's refinancing costs, potentially widening the deficit if growth slows. Yet the current growth surge, if sustained, could improve the debt dynamics. The bulletin's data also show a trade surplus of €3.82bn in 2025, underpinning the external position.