Is the Fed shifting the markets' focus from QE tapering to forward guidance as it fears rising rates? If it is, it would explain why it has postponed tapering.
After the Fed, the trend in long-term rates is unclear. We go for neutral duration in the bond portfolio.
We close a couple of trades.
With a more bond-friendly environment globally and pricing on the Riksbank too aggressive, we see the Fed move as a good opportunity to take more risk. We recommend extensions along the covered bond curve (more risk, both credit and duration). Buy SHYP1578 (Sep 2016) and sell SHYP1576 (Mar 2015) in nom/nom volumes.
The Swedish FSA is altering the proposal on how to construct the discount rate curve for the Life & Pension sector: two reasonable and justified improvements compared with the original proposal.
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