In Sweden two events are in focus: the updated net borrowing forecast from the Swedish National Debt Office (SNDO) on 26 October and the outcome of the Riksbank meeting on 27 October.
We expect the SNDO to reduce its financial plans for government bond borrowing by SEK17bn to SEK60bn.A borrowing adjustment of that magnitude could have a major impact on a bond market that has already begun to show signs of supply shortages.
Our main scenario is that the Riksbank extends its QE programme by SEK30bn (20 in nominal bonds and 10 in linkers) for half a year, i.e. for the first half of 2017. However, it cannot be excluded entirely that the Riksbank will choose to wait until December, as there is a bit of free space given the weaker SEK.
We see value in the Swedish fixed income market ahead of the two releases and see upside risks to EUR/SEK.
In Norway , we do not expect Norges Bank to touch interest rates at its rate-setting meeting on Thursday, nor will there be a new monetary policy report, so we do not expect any fresh signals after the bank indicated unchanged rates at its September meeting. So little market impact expected but risk is skewed towards lower market rates in Norway.
In Denmark , a quiet week is in store, with the only significant release the business tendency surveys for October, due on Friday.
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