At Any Rate Global Rates: Scandinavian interest rate update
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May 23, 2025 Frida Infante, a Rates Strategist, joins Khagendra Gupta to delve into the Scandinavian interest rate markets. They highlight the evolving economic landscape in Sweden and Norway, touching on recession risks and central bank policies. Frida reveals how Sweden's increased bond issuance impacts swap spreads and discusses the bullish trends in NIBOR yields driven by positive macroeconomic indicators. Together, they navigate the complex interplay between fiscal policies and market dynamics, offering insights into future investment strategies.
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Global Yield Curve Dynamics
- Developed markets' yields have risen due to US-China trade optimism and US fiscal expansion.
- This has steepened global yield curves and reduced recession risks, revising central banks' easing expectations.
Scandinavian Growth and Fiscal Policies
- Scandinavian GDP forecasts have improved, especially in Sweden and Norway for 2025-2026.
- Sweden uses fiscal stimulus and military spending, while Norway maintains strong fiscal stance despite a budget deficit.
Central Bank Rate Cut Timing
- Expect a 25 basis point rate cut from Sweden's Riksbank in June but with risk of delay to August or September.
- Norwegian Norges Bank is likely to start easing in December, with unchanged terminal rate at 3.5%.