The Swedish fixed income market is currently governed almost completely by international interest rate movements and with important data, along with information from both the ECB and the Fed next week, this is likely to continue despite the release of Swedish GDP for the second quarter on Tuesday next week.
Our recommendations, although there are no direct duration plays, benefit from higher interest rates and ahead of next week, including the interest rate decision from the ECB and Swedish GDP data, it may be wise to consider adding a tactical protection to the portfolio by receiving three- to five-year swaps or buying bonds in the same segment. Our long-term stance, for higher interest rates, is however intact but, with uncertain outcomes next week and close to no probability of a rate cut in the autumn left in the RIBA contract, we see the risk-reward as relatively good.
We look at the capricious Q2 flash GDP estimate.
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