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Fixed Income

FI Comment — SEB will introduce a new SEK covered bond

  1. SEB will introduce 576; matures on December 20, 2023
  2. The coupon is 1%; ISIN SE0010049841
  3. Pricing at 26-27bp over swap; matched maturity

Kiran Sakaria, Junior Strategist | kisa02@handelsbanken.se

FI Comment — SCBC to introduce a new SEK covered bond

  1. The Swedish Covered Bond Corporation (SCBC) will introduce 144
  2. The coupon is 1%; ISIN SE0011167428
  3. Pricing 23bp over swap, matched maturity

Kiran Sakaria, Junior Strategist | kisa02@handelsbanken.se

Swedish Rate Wrap — Stronger krona no obstacle to rate hike

Remarkably, this week's inflation figures managed to land close to both the market's and the Riksbank's expectations. Even so, we saw the largest daily strengthening of the krona in conjunction with CPI results since 2013 (Figure 1). As we see it, this strengthening is a reaction to an unjustifiably steep decline in the wake of the Riksbank's repo rate decision. Backed by inflation figures that are in line with the Riksbank's forecast, and the minutes from the Riksbank's April meeting, the signals are growing stronger that a rate hike really will be introduced this year. We expect the increase in interest rates at the short end to continue, and repeat our forecast of a hike in December.

We also consider the size of the initial repo rate hike, which is back on the agenda this week following responses from the Riksbank Executive Board members to questions from journalists. Although we see few economic reasons to deviate from the standard 25bp steps, we do not preclude a smaller repo rate hike as a compromise solution.

Claes Måhlén, Chief Strategist | clma02@handelsbanken.se

Ränterullen — Starkare krona inget hinder för räntehöjning

Veckans inflationsutfall lyckades för ovanlighetens skull landa nära både marknaden och Riksbankens förväntningar. Trots det blev resultatet den största dagliga förstärkningen av kronan i samband med ett KPI-utfall sedan 2013 (bild 1). Som vi ser det är förstärkningen en rekyl på en omotiverat stor försvagning efter Riksbankens räntebesked. Med inflationsutfall i linje med Riksbankens prognos och protokollet från Riksbankens aprilmöte förstärks intrycket att en räntehöjning verkligen blir av i år. Vi räknar med att ränteuppgången i det korta fortsätter och  upprepar vår prognos om en höjning i december.

Vi resonerar också kring storleken på en första räntehöjning, vilket åter hamnat på tapeten i veckan efter kommentarer från Riksbanksledamöter på frågor från journalister. Medan vi ser liten ekonomisk anledning att frångå de gängse 25-punktersstegen utesluter vi inte att en mindre räntehöjning kan bli en kompromisslösning.

Claes Måhlén, Chief Strategist | clma02@handelsbanken.se

FI Comment — Bond Index changes, May 2018

  1. Danske Hyp 2312 and Spintab 193 included in HMSC and HMSM
  2. S3110 will be excluded in HMSL
  3. Indices will rebalance 2018-05-08

Kiran Sakaria, Junior Strategist | kisa02@handelsbanken.se

Swedish Rate Wrap — Riksbank expects the SEK to strengthen at record pace

As expected, the Riksbank adjusted its repo rate path to indicate an initial repo rate hike in December rather than September. Its inflation forecast was revised both up and down. The more remarkable story was instead the Riksbank's view of the Swedish krona. Its forecast for the trade-weighted KIX index was an increase of more than 2% on current levels during the second quarter, and of more than 4% by the third quarter. Coupled with a modified formulation concerning the krona in its press release, the Riksbank now appears to be loosening the tight currency knot by removing the 'put' in the EURSEK, which we think played an important role in the weakening of the SEK. We get the impression that the Riksbank is not interested in the SEK becoming even weaker. Given our view of the inflation trend, we believe the decision by the Riksbank signals a rate hike before year-end.

Claes Måhlén, Chief Strategist | clma02@handelsbanken.se