A lot of data is due to be released next week, such as trade balance figures (forecast 7bn surplus) and retail sales, where we think the y/y rate due to a temporary base effect will jump to 4%. Also, Q3 GDP will be released and we expect to see a 0.3% q/q increase.
We reduce our CPIF inflation forecast to the 1.2-1.5 range for 2014-15. Wage growth too has been undershooting expectations in the aftermath of the crisis.
In recent weeks, we have argued for a steeper 5/10 year curve with ‘lower for longer’ benefiting the 5s while upcoming tapering with higher 10-year treasuries will feed through to Swedish 10s. Judging by the latest FOMC minutes, this case may be in for a reality check in the not-too-distant future.
A rate cut is not far from being fully priced in but there is more potential left further out on the yield curve.
Trades
Profit taken: sell RIBAMAR14. Profit taken at 0.84%. Profit +6bp.
New: receive SEK 5y against 2y/10y in a butterfly on the swap curve. We prefer to do it 6M forward @ 9bp. P/L: -10bp/20bp.
To Read the Entire Report Please Click on the pdf File Below.
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Reading The Swedish Markets
Published 11/22/2013, 03:53 AM
Updated 05/14/2017, 06:45 AM
Reading The Swedish Markets
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