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Weekly Focus Sweden: Time For Tapering‏

ByDanske Markets
Published 09/15/2013, 05:24 AM
Updated 05/14/2017, 06:45 AM
Market movers ahead

We expect the Fed to initiate the tapering of the QE programme at next week's FOMC meeting. We expect a reduction in treasury purchases of $10 billion. Ben Bernanke is expected to stress that the first Fed funds rate hike is not likely to come before mid-2015.

In the euro area, the German federal election gets attention. The state election in Bavaria held on September 15th may give some clues to the outcome of the federal election to be held on Sunday, September 22nd.

In Norway, the week brings a rate-setting meeting. We expect the interest rate path to be pushed up over the coming year, and point to a first rate hike in March 2014. In Sweden and the UK, minutes from central bank meetings in September are due to be released.

Global macro and market themes
Risk markets - especially emerging markets (EM) - got more relief over the past week on a combination of positive events regarding Fed tapering, the emerging market crisis, and the Syrian conflict. We still see scope for more positive surprises in emerging markets as the sentiment shift is still at an early stage.

We believe the Fed's forward guidance will prove just as important as tapering. At the FOMC meeting, the Fed will extend its projections for rates to 2016 and hence we should get a better sense of how fast the Fed expects to be hiking once it starts.

Euro data disappointed for the first time in long time but soft data continue to be strong into August signalling higher growth over the summer.

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