Compared to last week we have a quieter week ahead in Sweden . Besides the PMI indicator (published Tuesday 08:30 CET), we see only industrial data (Thursday 09:30 CET), i.e. production and orders. Given the weak input data to Q3 GDP published so far, we need this particular outcome to be very strong indeed.
We take a closer look at the Riksbank announcement and the SNDO updated borrowing requirement. We argue that value is found in SEK rates up to 5Y and that the SEK should stay weak for longer. The upside in EUR/SEK should be limited though, given that the pair is already trading at overvalued levels and also given that the ECB is expected to extend QE in December, where we expect a Riksbank taper relative to the ECB.
The Riksbank will tap in the 3Y and 10Y bonds. The auctions should go smoothly. The amount for sale has been revised from SEK3.5bn to SEK3.0bn.
In Norway , a much quieter week awaits, with the only significant release being the October PMI due Tuesday. Both the PMI and Statistics Norways confidence indicators have pointed to a gradual improvement in manufacturing activity over the past year but the surprise fall in confidence in Q3 has changed this picture and sown the seeds of doubt about the strength of the manufacturing recovery. Therefore, there is a risk that the PMI will start to head down again in Q4.
The Norges Bank will tap the market also on Wednesday. We look for a tap in the usual 10Y bond. The announcement will come later today (Monday).
We see risk of a weaker NOK ahead of year-end.
In Denmark , the Nationalbank releases currency reserves data for October on Wednesday. The reserves have been relatively stable since June and we see no immediate reason for things to have changed in October.
The Danish Debt Office will also tap the markets on Wednesday. The tap will be in the usual 2Y and 10Y benchmark bonds.
To read the entire report Please click on the pdf File Below....