In Sweden, we believe that CPIF inflation will drop a tenth below the Riksbank's new forecast to 0.4% y/y. However, if we are wrong about clothing and airline tickets, the outcome will most likely turn out higher than the Riksbank's forecast. Either way, the deviations are likely to be too small to make a case for the Riksbank.
The Riksbank's rare decision last week went according to plan, i.e. the GDP forecast was revised down and the repo rate path had a marginal downward adjustment and there were clear signals that Swedish QE is not on the agenda. After the new ECB measures, we reiterate our positive view on Swedish covered bonds.
The most important data in Norway will be the regional network report from Norges Bank - the central bank's preferred indicator for growth in the Norwegian economy. We cautiously estimate that the business expectations index for the next six months will rise from 0.89 in Q2 to around 1.5 in Q3. This would be consistent with GDP growth of around 0.75% q/q, i.e. significantly higher than assumed by Norges Bank in its June Monetary Policy Report. But note that the drop in global rates and the weak oil investment survey last week point in the other direction. Hence, we keep our positive view on 10Y NGBs.
General election in Sweden not expected to shake the markets.
Next week also brings the Norwegian inflation numbers for August. Core inflation, CPI-ATE, has delivered upside surprises this year, but we nevertheless expect that the annualised rate will slow from 2.6% in July to 2.3% in August, due to base effects.
In Denmark, it will be especially worth keeping an eye on August inflation, which we expect to come out at 0.1% m/m and 0.8% y/y, compared with -0.1% m/m and 0.8% y/y in July. The big joker in the pack - once again - is food prices, which have risen in recent months after falling earlier in the year.
Denmark followed the ECB 10bp rate cut last week. However, the move does not change our call for an independent rate cut by Danish Central Bank within the next 3M, which should relieve some of the present downward pressure on EUR/DKK.
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