Reading The Markets Sweden: Riksbank Surprises Big Time

Published 07/03/2014, 01:59 AM
Updated 05/14/2017, 06:45 AM

Big time surprise from the Riksbank: a 50bp rate cut and more than a 100bp downward adjustment of the rate path (unseen). We believe it is on the right track but the rate path is still fairly steep relative to, for instance, the ECB (forward guidance) and Norges Bank during 2016 and beyond.

The Riksbank delivered more than we dared wish for. However, we think that the 5Y point on the curve has further to go. We adjust the levels in a few of our recommendations but keep the same overall view on SEK rates.

Trades

New levels: receive 2Y2Y versus EUR. P/L: 0.6/0.85.

New levels: buy 5YSEP2014 bond future outright. P/L: 0.75/1.

To Read the Entire Report Please Click on the pdf File Below

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