In Sweden, the week ahead contains a few interesting sets of data. The National Institute for Economic Research releases a new forecast (Wed., at 09.15 CEST) and its Business- and Consumer Confidence Surveys (Wed., at 09.00 CEST). The same day, at 09.30 (CEST) Statistics Sweden publishes the labour force survey, including unemployment rate, employment, hours worked etc., where we will continue to monitor employment developments closely.
We see several factors being supportive of Swedish Fixed Income market over the next six months.
We do not expect Norges Bank to touch interest rates at its meeting Thursday, so interest will again centre on what signals it puts out about where rates might be headed, in particular the rate path in the new monetary policy report. On balance, we are looking at very minor revisions to the rate path in the new report. The reason why we still expect a slightly less aggressive path is entirely because the risk outlook has changed. Higher oil prices and reduced fears of serious second-round effects mean that the downside risk to the Norwegian economy has decreased. At the same time, housing prices and household borrowing have risen more than expected, rekindling fears of a build-up of financial imbalances. We therefore reckon that the probability of a cut in September has now fallen to 80-90%, and the chances of a further cut after that are now pretty much zero.
In Denmark the market will continue keep a very close eye on the UK polls ahead of the UK EU referendum later this week. Especially, as the Danish krone remains supported, as EUR/DKK continue to trade in the 'intervention zone'. If we see a Brexit it is still our view that we will see an inflow into DKK assets and we continue to see Danish Fixed Income as an attractive Brexit hedge. If the UK remains in the EU Danish Fixed Income should not underperform any significantly.
This will be the last last issue of Scandi markets ahead before the summer holiday. We will be back in August.
To read the entire report Please click on the pdf File Below