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Macro Comment Sweden

Macro Comment Sweden — US money market reform weighs on STIBOR rates and SEK

• New US money market regulation pushes LIBOR rates higher
• Less incentive for the Fed to hike rates
• STIBOR rates are pushed lower through the FX swap market, hurting the SEK
• Situation unlikely to deteriorate much more 

Claes Måhlén, Head of Trading Strategy | clma02@handelsbanken.se

Macro Comment Sweden — Brexit: implications for the Swedish economy

In this note, we outline a short summary of possible impacts on Sweden in the event of a Brexit.

Anders Brunstedt, Economist | anbr42@handelsbanken.se

Macro Comment Sweden — Job vacancies surge to new highs in Sweden

Job vacancies reached record highs in December and new vacancies are now 60 percent higher than at the 2007 business cycle peak. This sign of heat in the labour market is accompanied by a fast-growing mismatch between jobs available and job applicants. This has contributed to rising unemployment among immigrants, especially those from outside the EU, which has kept overall unemployment almost flat in 2015.

Macro Comment Sweden — Riksbank FX intervention a step in the right direction

In a December 30 press release, Riksbank Governor Stefan Ingves strongly hinted that currency interventions might be used if the strength of the Swedish krona threatened a return of inflation to the targeted level in 2016. We see this as a sign that the Riksbank is uncomfortable with further repo rate cuts and is ready to try a new approach to keeping the krona in line with Riksbank forecasts. This is a step in the right direction, in our view, as the repo rate is extremely far out of line with nominal GDP growth, leading to excessive credit expansion. Moreover, currency reserves are small in comparison and pose no restriction on the scale of interventions.

Macro Comment Sweden — Swedish labour market is red hot

The unemployment rate declined more than expected in November to 6.8 percent and is now in overheated territory, according to recent estimates of NAIRU. But due to a rapidly rising mismatch between job vacancies and job applicants, aggregate unemployment may be a misleading indicator of how overheated the labour market is. The skills mismatch is an important explanation as to why jobless rates differ so much between people born in Sweden and others. We think the jobless rate for domestic born, which is already at the lows from the previous business cycle peak, might be a better measure of how overheated the labour market actually is.