In Sweden, the Riksbank monetary policy decision (due Thursday at 09:30 CET) willdominate the week ahead and, with a high degree of confidence, we expect nochange in the repo rate.
This week Sweden is also tapping in the 5Y segment and we believe that the spreadto Bunds is attractive given the recent widening to 100bp.
We estimate that Norwegian core inflation held at 2.0% y/y in January, which isroughly in line with Norges Bank’s projections in the December monetary policyreport. This would put an end to any argument to revise down the interest rate pathin the next report at the end of March, so pushing up yields and lifting the krone.
Norges Bank is tapping its 5Y bond (maturity 22 May 2019) on Tuesday 11 Februarywith NOK3bn. This 5Y bond is currently trading in the middle to high end of therange over the past year, in terms of yield spreads relative to both German andSwedish government bonds. We believe this offers reasonably good value comparedwith other solid sovereign government bonds.
We continue to see upside for NOK/SEK based on relative core inflation and relativegrowth performance in Q4 13.
We still expect to see an independent Danish rate hike over the next couple ofmonths. But timing is difficult and we continue to argue that the Danish CITA is stilltoo steep relative to the EONIA curve.
Read the full report: Market Research
Danske Bank