We argue that Riksbank remains wrongly priced. Over the last week the Swedish fixed income market has priced out some of the Riksbank rate cut expectations for the next two meetings and market pricing in fact indicates a probability of a rate hike in autumn 2014, which we strongly disbelieve will happen.
Swedish PMI manufacturing is expected to rise in November, in line with Germany and NIER manufacturing index, implying that the divergence between Swedish soft and hard data will continue for yet another month.
This year's transfer of the Swedish pension money (PPM) will take place over the weekend of 7-8 December, with the first trading day being 9 December. We expect the amount to be close to last year's SEK33bn (somewhere between SEK33bn and SEK35bn). We find that since the beginning in 2001 the EUR/SEK has more often than not risen in the days before the PPM date and continue to target 9.00 as a 1M forecast in the EUR/SEK.
The big event in the Norwegian market is Norges Bank's interest rate decision and the new Monetary policy Report on 5th December. We expect the policy rate to remain at 1.5%.
However, the rate path is now expected to be revised downwards pushing back the next rate hike to the first half of 2015. Given the high correlation with relative rates a new 2013-high in EUR/NOK is expected this week. We continue to warn about the poor liquidity in the Norwegian currency market in December.
To Read the Entire Report Please Click on the pdf File Below.
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Scandi Markets Ahead: Another Soft Norges Bank Monetary Policy Report
Published 12/02/2013, 06:44 AM
Updated 05/14/2017, 06:45 AM
Scandi Markets Ahead: Another Soft Norges Bank Monetary Policy Report
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