Review
Interest rates have moved sideways over the past month as the outlook is unchanged.
The ECB has a clear easing bias but so far only delivered verbal intervention in 2014.
The Fed is not happy about the perception that policies are now less accommodative.
International rates
Inflation is set to undershoot ECB expectations and lead to additional easing and more rate cuts are on the cards.
Furthermore, it seems increasingly likely that the ECB will do a form of quantitative easing through the private debt markets.
We expect the Fed to be broadly on autopilot, continuing to taper by USD10bn until Q4 14 when the QE programme will be phased out completely.
We expect global rates to move sideways until there is further clarification of the ECB's course and until US data turns better.
There is potential for higher rates mainly at the long-end of the curves towards the end of the year.
Scandi rates
In Denmark we no longer expect any independent rate hikes in the forecast horizon. This means that the certificate of deposit rate will remain negative for the next year.
In Sweden we expect a July rate cut and postpone the expected first hike to Q3 15.
Norges Bank to stay on hold for the next year and the market is already priced for this.
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