Swiss and Nordic financial markets have been a mixed bag over the past month. Equities in most countries have risen, supported by continued fairly strong economic growth. But equities in Norway and Iceland have fallen. In Norway, this largely reflects the decline in oil prices, with energy companies accounting for more than 40% of the benchmark index. Lower oil prices also dragged the Norwegian krone down. And the Swiss franc has weakened, perhaps due to diminished safe-haven demand as bond spreads in the euro-zone have narrowed.
Meanwhile, yield curves have flattened. In Finland, this has been driven by higher short-dated yields, while in Norway it has been due to lower long-dated yields. But in all of these countries, yield curves remain steeper than in the US, where the recent flattening has prompted concerns about a recession. So we do not think that flatter yield curves in Switzerland or the Nordics signal trouble ahead.