Swedish interest rates have trailed the moves in global rates (mainly European ones) over the last few weeks, and we now argue that it is time to go long. We like to receive SEK 5y5y against EUR or alternatively buying SGB1058 (the 10y bond) against Bunds.
The Swedish calendar is more or less empty but keep an eye on new comments from Riksbank members.
In Norway we expect Norges Bank to lower interest rates by 25bp on Thursday and present an interest rate path in the new monetary policy report showing a 50/50 chance of a further cut. This will be considered as a dovish move.
We like the 10y segment in Norway and recommend buying the new NGB Mar '25 or alternatively the old and more liquid NGB 3.0% Mar '24 (NST476) either against bunds or alternatively asset swapped. For those not interested in the FX exposure one could also consider receiving NOK swap 5y5y against EUR, which trades close to 140bp. We recommend the trades ahead of the Norges Bank meeting this week.
We also think the 10y segment of the Danish curve offers value after recent underperformance. Some of the ECB QE money will almost inevitably end up in the Danish market. Furthermore, we continue to argue that the Danish CITA curve is far too steep and that it does not reflect the risk of one or more independent Danish rate hikes. Hence, we expect that policy rates will continue to stay well below those in the Euro zone. Keep an eye on possible comments from Central Bank Governor Rohde this week as the Q1 Monetary Policy Review is published.
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