In Sweden , the week ahead does not contain any data that would normally have an effect on financial markets. This is too bad, because both the household consumption indicator and business sector production index have strong explanatory power for GDP developments. After next week, we should have a clearer view on the Q4 16 GDP outcome.
We take a sneak peek at the January CPI data and the Riksbank announcement in a week's time. We see risk of negative Fixed Income news and recommend to hedge by being short EUR/SEK.
Norwegian core inflation fell surprisingly sharply in December to 2.5% y/y. We predict a moderate rise in core inflation to 2.6% y/y, with a slight risk to the upside if anything.
Mainland GDP recovered gradually during 2016 but growth is still modest, as headwinds from the oil shock persist. Based on the stabilisation in unemployment rates, we would estimate that mainland growth was at levels around trend growth in Q4, at around 0.5% q/q. However, the significant drop in mainland exports implies a major drag on GDP. We estimate growth in mainland GDP of 0.1% q/q in Q4.
The absolute highlight in the Danish market in the coming week will be the February 2017 refinancing auctions of Danish non-callables (refinancing of April maturing bonds). The auctions start tomorrow and will continue until Friday.
The Danish Debt Management Office will sell the new 10Y DGB 2027 this week. We think it offers some value versus swaps and DGB 2025.
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