In Sweden, the week ahead will see important activity data with industrial and services production on the agenda. At the same time, we will also receive industrial orders, which will give us information on the demand situation in the Swedish industry. Finally, services PMI (Tuesday at 08:30 CET) and house prices (Thursday at 09:30 CET) will be published.
Following a relatively strong move higher in EUR/SEK in March and April, it now seems the cross has stabilised at least for now around the current level. We have recently seen some support to the SEK offsetting the negative impact of relative rates. However, that said, there is still underlying support for EUR/SEK. The money market might start to price in more than one rate cut and we will see a huge redemption in the Swedish government bond market as the SGB1041 expires today.
In Norway, we do not expect any new signals from Norges Bank at the week's rate-setting meeting. Since the last meeting and the March monetary policy report, the domestic economy, the global economy and the krone have all performed largely as expected, while inflation has been marginally higher than expected. At the same time, most banks have cut their lending rates for both household and business customers. In isolation, this would point to the central bank's policy rate being raised earlier than previously indicated. Should, against expectations, there be any new signals from Norges Bank, the risk is therefore on the upside.
In April the Danish National bank had to intervene by DKK20.1bn to support DKK. The amount of intervention in April indicates that the unilateral rate increase in April was more or less business as usual. Historically, DN has intervened around DKK10-20bn before making an independent rate change. This week Denmark is tapping in the 5Y segment and the 10Y linker. We are reluctant to enter a breakeven trade even at these levels. However, we expect strong demand for the 5Y benchmark given speculation that Danish covered bonds might not become Level 1 assets.
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