Inflation will set the agenda in both Sweden and Norway. In April we saw a significant move higher in Norwegian core inflation and the opposite in Sweden. This divergence is expected to reverse in May.
The expected reversal of the inflation picture in Norway and Sweden is expected to trigger a new correction lower in NOK/SEK, but no new bear trend in the cross is expected.
Inflation numbers are not expected to change our main view that both the Norges Bank and the Riksbank will keep rates unchanged at the next monetary policy meetings.
The 10Y auction in Sweden (12 June, SEK3.5bn) and the 4Y auction in Norway (11 June, NOK3bn) are the focal points for the Nordic government bond markets. We expect solid investor interest following the recent underperformance of, in particular, 10Y Sweden but also the 4Y Norway relative to Bunds.
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