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 falling back by the end of 2019. The performance of currencies is likely to diverge over the next six months. We think that the Swiss franc will rise further in 2020 on the back of looser policy by the ECB. By contrast, the Swedish krona will probably fall over the second half of this year as global trade tensions resurface and the Riksbank is forced to confront the weakening outlook for domestic demand. Meanwhile, the spurious tendency for the Norwegian krone to trade in line with its Swedish counterpart will probably prevent it from rising further this year, even as the Norges Bank stays in tightening mode.
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