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Having seen investors move in line with our previously uber-dovish view on Swedish interest rates in recent months, we now expect the Riksbank to cut the repo rate to -0.50% by the end of the year. With news on the economic front going from bad to worse, …
14th August 2019
Weaker inflation to support dovish shift by the Riksbank The fall in Swedish inflation in July provides further confirmation, if it were needed, that the Riksbank will have to revise down its forecasts for the repo rate at its next meeting, on 5 th …
No end in sight to the downturn in Sweden The latest data releases for June from Sweden show that the flash estimate of a contraction in the economy in Q2 was no rogue reading. We learned on Tuesday morning that private sector production fell for the …
9th August 2019
Above-target core inflation to keep Norges Bank in tightening mode, for now The fact that core inflation in Norway remained above target for the ninth month in a row in July will keep the Norges Bank in tightening mode for now. But with prices pressures …
Norges Bank to raise rates in September, but this will be the end of the tightening cycle. It is now a question of when, not if, the SNB cuts rates further into negative territory. Expected dovish shift by the Riksbank will ensure that the krona stays the …
8th August 2019
While much of the market’s focus has been on China, Switzerland appears set to become the first country to meet all three of the US Treasury’s criteria of being a ‘currency manipulator’ later this year. However, if the SNB cuts interest rates, as we and …
7th August 2019
Swedish economy to flirt with recession… The 0.1% q/q fall in Swedish GDP in Q2 is unlikely to be the final word on the matter given that the data are almost certain to be revised in September. (See here .) Nonetheless, the release adds to signs that the …
2nd August 2019
Fall in Swiss inflation adds to pressure on the SNB The unexpected fall in Swiss inflation in July, and signs of a deepening downturn in the industrial sector, will only strengthen the resolve of the SNB to resist the rising franc. There is a growing …
Losing pace into Q3 The sharp fall in Norway’s manufacturing PMI in July adds to signs that the economy is losing momentum and lends support to our view that the Norges Bank will hike rates by less than investors expect this year. Meanwhile, the weak PMI …
1st August 2019
The decline in Swedish GDP in Q2 will make it harder for the Riksbank to sit on the fence. With the economy unlikely to find much support in H2, the rising prospect of a recession lends further support to our forecast that the krona will fall sharply by …
30th July 2019
Dovish ECB to make life difficult for the SNB Having seen the Swiss franc post multiple fresh two-year highs against the euro early in the week, the SNB will have welcomed the drop in the currency after the ECB meeting on Thursday. The fall was mirrored …
26th July 2019
The Swiss franc has been the best performing G10 currency over the past three months, despite falling back a bit after the ECB meeting on Thursday. We think that monetary policy as well as safe-haven flows will continue to support it against the euro …
The apparent confirmation this afternoon that the ECB is inching towards loosening policy lends further support to our view that more rate cuts are on the cards in Denmark and Switzerland too. As we had expected, the ECB left its policy settings unchanged …
25th July 2019
While recent market attention has been on the ECB and Fed, the rise in the Swiss franc has ratcheted up the pressure on the SNB. As a result, investors have come around to our view that the Bank will push the boundaries of monetary easing by cutting rates …
23rd July 2019
It is becoming harder for the Riksbank to brush aside mounting signs of weakness in domestic demand. We expect it to turn more dovish, and the krona to weaken, over the second half of the year. The Riksbank’s reasonably upbeat assessment about the outlook …
22nd July 2019
Franc leaves exporters with a mountain to climb The widening in Switzerland’s trade surplus in June (data released on Thursday) was driven in large part by weakness in imports and masked a continued slowdown in export growth. The rise in the value of the …
19th July 2019
Markets Overview – We think that a combination of policy loosening by major central banks, an increase in investor risk aversion, and mounting trade tensions will lead to bond yields in Switzerland and the Nordics staying lower for longer and equities …
17th July 2019
The Riksbank has fallen well behind the curve The minutes of the Riksbank’s July monetary policy meeting, released this morning, offered little in the way of surprises. As was the case in the February meeting, the decision to hold the repo rate unchanged …
12th July 2019
Given the parallels with Brexit, the recent escalation in the spat between the EU and Switzerland has filled many column inches over the past month. (To re-cap, after the Swiss government refused to sign off on the proposed new treaty, the EC followed …
Core inflation likely to fall back into 2020 While core inflation in Sweden edged up once again in June, we expect weak domestic demand to weigh on underlying price pressures over the second half of the year and into 2020. Having risen to a seven-month …
11th July 2019
Above-target core inflation supports Norges Bank’s hawkish bias The larger-than-expected fall in the headline Norwegian inflation rate in June is unlikely to change the Norges Bank’s hawkish bias. With core price pressures still running above target, it …
10th July 2019
Swiss market shrugs off loss of ‘equivalence’ The Swiss stock market took the expiration of the ‘equivalence’ regime with the EU in its stride this week, mirroring the buoyant performance of other equity markets. The Swiss Market Index (SMI) jumped by …
5th July 2019
Stable, but set to fall to zero Swiss inflation held steady at a very low rate in June and we expect it to fall to zero during the second half of the year on the back of the stronger franc. With deflationary fears set to come back on the agenda, we think …
4th July 2019
The decision by the Riksbank to leave its repo rate on hold at -0.25% this morning came as no surprise, but the fact that it left its (in our view) optimistic forecast for interest rates unchanged bucks the dovish trend by other central banks, notably the …
3rd July 2019
Swiss pension funds and life insurers have been among the losers from negative interest rates, but the SNB is unlikely to follow the Bank of Japan’s example of targeting long-term bond yields to limit the damage on the sector. Given that we now expect …
2nd July 2019
Another weak set of PMIs point to loss of momentum into H2 The Swiss manufacturing PMI for June shows that conditions in the industrial sector have worsened going into H2, while the indicator from Sweden suggests that the economy contracted in the second …
1st July 2019
Swiss-EU stock market equivalence is no more The spat between the Swiss government and the EU came to a head this week after it became clear that the EC will follow through on its threat to let the current ‘equivalence’ regime for share trading lapse from …
28th June 2019
Franc to rise further despite subdued Swiss activity The modest decline in the Swiss KOF Economic Barometer in June lends further support to our view that the Swiss economy will lose momentum over the course of this year. And with the franc likely to rise …
Following this morning’s decision by the Central Bank of Iceland (CBI) to cut its key interest rate by 25bps, we now think that further cuts are in the pipeline. However, to the extent that a rumoured fiscal stimulus and a weaker króna help to steady the …
26th June 2019
While the escalating spat between Switzerland and the EU has drawn obvious parallels with Brexit, the implications for Switzerland are likely to be quite modest. And while Brexit has taken a toll on sterling, the latest dispute is unlikely to detract from …
Having seen the Swiss franc climb close to a two-year high this week following the flare-up in tensions between the US and Iran, the SNB will surely consider intervening soon – particularly if these geopolitical tensions persist. Nonetheless, with the ECB …
21st June 2019
This morning’s decision by the Norges Bank to raise its policy rate from 1.00% to 1.25% came as no surprise. But while policymakers left the door open for further rates hikes in 2019, we think there is only room for one more 25bp hike in the current …
20th June 2019
Investors have slashed their expectations for interest rate hikes in Sweden over the coming years and are now broadly in line with our previously well below consensus view. But while we now forecast the ECB to lower rates a little further into negative …
19th June 2019
The small interest rate cut that we now forecast by the ECB in December is unlikely to be matched immediately by Denmark’s Nationalbank (DNB). But given that upward pressure on the krone is now likely to build sooner than we previously thought, we expect …
18th June 2019
The Swiss National Bank’s decision to leave its monetary policy settings unchanged on Thursday was something of a formality. But whereas some commentators have suggested that the Bank is out of ammunition, we think it is on course to cut interest rates …
14th June 2019
While Swedish inflation surprised on the upside in May, we expect it to fall back as economic growth slows over the coming months. As a result, we are sticking to our dovish view that the Riksbank will leave its repo rate unchanged until at least 2022. … …
As expected, Swiss policymakers maintained their expansionary monetary policy at their June policy meeting. But the recent shift to a looser bias in the US and the euro-zone only strengthens our view that Swiss rates will be cut further into negative …
13th June 2019
Q1 GDP data for Switzerland and the Nordic economies were a mixed big and proved the adage that the devil is in the detail. Switzerland and Sweden both posted the same headline growth rate (0.6% q/q). But while the breakdown of the former’s growth was …
12th June 2019
The weaker-than-expected inflation data for May from Norway are unlikely to prevent the Norges Bank from hiking interest rates again at its policy meeting next week. But they increase the chance that next week’s hike will mark the end of the current …
11th June 2019
Political news dominated this week, with the left-wing ‘red-bloc’ winning a majority in Denmark’s election and the successful formation of a five-party coalition in Finland – the Rinne Cabinet. On the economic front, manufacturing PMI data for May showed …
7th June 2019
Swedish policymakers are increasingly vocal about their concerns that the sharp sell-off in the krona this year has gone too far. But we find little evidence to support the idea that the currency has been oversold. … Just how weak is the Swedish …
4th June 2019
The morning’s release of inflation and PMI data from Switzerland for May showed that price pressures remain almost entirely absent and that the industrial sector remains in the shadow of the euro-zone. … Swiss CPI & Manufacturing PMIs …
3rd June 2019
This week was dominated by Q1 GDP data releases, which surprised on the upside in both Switzerland and Sweden. But while the Swiss outcome was a welcome sign, the Swedish figure masked domestic weakness, and timelier indicators suggest that the pace of …
31st May 2019
Denmark’s forthcoming election has revealed a number of cracks within traditional party groupings which could complicate the coalition-forming process. But regardless of which parties end up in parliament, we think that the impact on fiscal policy will be …
30th May 2019
Swedish GDP surprised on the upside in Q1 but the outcome masked domestic weakness. With surveys indicating that growth will slow again, and core inflation set to stay subdued, we continue to expect the Riksbank to leave its repo rate on hold into 2022. … …
29th May 2019
Swiss Q1 GDP data released this morning offer some comfort that the Swiss economy has put the weak patch in H2 2018 behind it. But indicators suggest that growth is likely to slow over the rest of this year. … Switzerland GDP (Q1) and Swedish ETI …
28th May 2019
The Swiss franc has strengthened in recent weeks, and we think that this trend will continue over the rest of the year. By contrast, despite the Swedish central bank’s concerns about the krona’s weakness, we expect it to fall further. … Swiss franc set to …
24th May 2019
The Central Bank of Iceland’s decision to cut interest rates by 50bp to 4.00% came as a surprise. While it was prompted by a deterioration in the economic outlook, inflation expectations remain high and wage growth is strong. Given that the economic …
22nd May 2019
The recent sell-off in the Swedish krona to decade lows against the euro has been driven by a combination of a flare-up in global trade tensions and a dovish shift in the Riksbank’s policy stance. We think that things are likely to get worse before they …
20th May 2019
We suspect that the weather-related weak patch in Norwegian activity in Q1 will prove temporary. Meanwhile, following the recent flare-up in trade tensions and the Swedish Riksbank’s dovish shift, we have revised down our forecast for the krona. And as …
17th May 2019
