SNB’s patience appears to be wearing thin

We argued this week that the upside for the Swiss franc was limited and its inability to push past the CHF 1.04 per euro mark suggests that policymakers’ patience may already have been exhausted. We await the publication of the weekly sight deposit by the SNB on Monday to confirm our suspicions that the Bank has seen enough. But if the SNB is to avoid adding substantially to its already-bloated balance sheet, it will be hoping – like the rest of us – that Omicron fears blow over soon. Next week, we expect data to show that mainland GDP in Norway rose by about 0.2% m/m in October and that core inflation remained well below target in November.
David Oxley Senior Europe Economist
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Nordic & Swiss Economics Weekly

Green bond germination in Denmark

The fact that Denmark’s first “green” bond was nearly five-fold oversubscribed this week, and achieved a 5bp “greenium” over the corresponding conventional 10-year bond, illustrates the depth of investor demand for green debt. Next week, the main data release of note is the preliminary release of Sweden’s Q4 GDP, which we expect will show that output rose by 1.1% q/q.

21 January 2022

Nordic & Swiss Economics Update

Norges Bank will resume hikes in March

After twelve years in the job, Øystein Olsen was never going to spring a surprise at his last meeting in charge of the Norges Bank. Instead, the Bank left its policy rate unchanged at 0.5% and reiterated that it “will most likely be raised in March”. We think it will raise rates four times this year, to 1.5%.

20 January 2022

Nordic & Swiss Chart Book

Riksbank to have to change tack

The Riksbank has learnt from its past tendency to project rate hikes that never arrive. But the single repo rate rise by end-2024 that it currently projects is stretching the limits of plausibility in the other direction.

17 January 2022

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Nordic & Swiss Economics Update

Pandemic-era lessons for the Swiss franc

Given the uncertainty around Omicron, and the revealed preference of the SNB in recent weeks to largely stay out of the FX market, we would not be surprised to see the Swiss franc rise further against the euro in the near term. But any upside is limited, and the balance of risks is tilted towards depreciation in 2022. In view of the wider interest, we are also sending this Nordic and Swiss Economics Update to clients of our FX Market Service.

1 December 2021

Nordic & Swiss Economics Weekly

Virus news testing the SNB; “Take 2” for Swedish PM

Market worries about the B.1.1.529 virus variant have exacerbated upward pressure on the safe-haven Swiss franc and will test the SNB’s tolerance of a stronger currency. In our view, the Bank seems to be focused on managing rather than preventing the appreciation against the euro and we suspect that it will eschew large-scale interventions unless the franc reaches the CHF 1.025 per euro mark. Next week, we expect Swedish national accounts data to show that GDP rose by 1.8% q/q in Q3, while Swiss inflation data are likely to show that the headline rate edged down to 1.1% in November.

26 November 2021

Nordic & Swiss Economics Update

Riksbank injects a dash of hawkishness

In comparison to the chaotic scenes in the Riksdag yesterday, the Riksbank’s November meeting was a more sedate affair. While the Bank is in no rush to raise the repo rate, the insertion of a rate hike into the end of its three-year projection period means it is no longer as decidedly dovish.

25 November 2021
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