In Sweden , the week ahead should provide more insights to the business sectors as March industrial production and orders and service production are scheduled to be published on Tuesday (at 09.30 CEST). we will also receive the April PMI-surveys for both the industrial (Mon. at 08.30 CEST) and service (Wed. at 08.30 CEST) sectors.
After the Riksbank QE announcement we expect long-dated SEK government bonds trading at positive yields to outperform and we still like 5-10Y flatteners. Although there was no specific mentioning of including covered bonds, we think 3-5Y CBs (positive yields) are very attractive since the mortgage spread is higher than outright yield levels in 5-10Y. We expect EUR/SEK to be stuck in a soft range of, say, 9.00-9.60, where the upside is capped by relative fundamentals, valuation and the ECB and the downside is protected by the Riksbank.
In Norway we do not expect Norges Bank to touch interest rates on Thursday. When the March monetary policy report was unveiled, the bank signalled clearly that interest rates would be cut by the summer if economic developments panned out as forecast. The interest rate path presented in the report did include a chance of a rate cut as early as May, but we had the clear impression that this would require a fairly drastic change in the outlook. We are tempted to receive short-dated NOK swap rates as the market is not even priced for a 25bp cut in Q2 anymore. Some support to NOK expected if our rate forecast is correct.
Danmarks Nationalbank(DN) will release its currency reserves data for April. We already have an indication of the possible intervention amount from the so-called "banks net position" that have dropped more than NOK 35bn compared to the "projected net position" that DN publish before the month start. However, we doubt that the intervention has been this big as especially companies might have paid taxes early this year to avoid zero or even negative deposit rates at banks.
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