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Weekly Focus Sweden: Markets Prepared For Fed Tapering‏

ByDanske Markets
Published 12/15/2013, 03:37 AM
Updated 05/14/2017, 06:45 AM

Market movers ahead

We expect the Fed to announce tapering next week, but also to balance it with strong forward guidance to anchor bond yields.

In Sweden, subdued inflation has paved the way for a 25bp rate cut by the Riksbank next week.

We expect the European Council to close a deal on banking union at last.

In the euro area, we expect manufacturing PMIs to confirm a moderate recovery is continuing.

We do not expect the Bank of Japan to ease further next week despite slower Q3 growth.

We expect China to cut its growth target for 2014 to 7.0%, from 7.0% in 2013, in connection with the Central Economic Work Conference.

Global macro and market themes

In the US, a budget deal and strong data pave the way for imminent Fed tapering.

Markets are prepared for Fed tapering and we expect only modest upward pressure on US bond yields.

The ECB is under more pressure from disappointing industrial production, strong euro and declining inflation.

We now expect the ECB to introduce a negative deposit rate next year.

In China, industrial production has lost some momentum and inflation is easing.

We expect equities to outperform both government bonds and credit in 2014.

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