Higher Swedish CPI expected in December. Sharply higher prices on airfare tickets along with a big jump in gasoline, which is only partially offset by lower electricity prices, is likely to have resulted in higher overall inflation in December. We estimate both CPI and CPIF to rise 0.5% m/m resulting in y/y rates of 1.7% and 1.9%, respectively - both are 0.1 percentage points higher than the current Riksbank projection. We expect to see a correction down again already in the January numbers.
On 12 January, the minutes from the Riksbank's December policy meeting are due to be released. At the meeting, the Riksbank decided to extend government bond purchases by six months (SEK30bn). Three board members voted against, while two did not see reasons for an extension at all, and one wanted to limit further QE to SEK15bn in index-linked bonds. The minutes will reveal how they reasoned.
In Denmark , the statistical office is due to release inflation figures for December on Tuesday. Inflation has been low for a long time but we expect it to climb to 0.6% y/y (0.1% m/m) in December, due mainly to rising energy prices.
The Danish Debt Management Office (DMO) will tap the usual 2Y and 10Y benchmarks on Wednesday. This will most likely be the last tap in the current 10Y benchmark bond DGB 2025 for quite a while. The DMO will introduce a new 10Y benchmark bond (2027) on 25 January, and most long-end issuance will be focused on this new bond going forward. For more see Funding plans for Scandi DMOs in 2017 , which we published on 22 December last year.
In Norway , core inflation slowed to 2.6% in November. However, we believe that the underlying picture has changed little, and that there has simply been a faster pass-through from the exchange rate to import prices than we anticipated. We estimate food prices fell slightly less in December 2016 than they did in December 2015, which should help push core inflation back up to 2.8% y/y. This is only marginally lower than Norges Bank's projection in the December monetary policy report, and should therefore have only a limited market impact.
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