HALISTER1: Position for Flatter 5Y10Y SEK Curve on Riksbank Repricing: SEB

Position for Flatter 5Y10Y SEK Curve on Riksbank Repricing: SEB

(Bloomberg) -- Position for a flatter SEK 5y/10y vs USD curve in order to hedge against global steepening risks, SEB’s Head of European Macro and Fixed Income Research Jussi Hiljanen writes in note.
  • With the ECB gradually turning less dovish, risks of a re- pricing of the SEK curve are increasing once markets also begin to price a turn of the Riksbank’s monetary policy cycle, resulting in a substantial under-performance of the SEK 5y segment and a flattening of the SEK 5y/10y curve
  • With the Fed expected to hike cautiously, flattening potential of the USD 5y/10y curve is much more limited
  • SEK 5y/10y trades near record steep vs the USD curve
  • Forwards are pricing ~6bps relative flattening in 12m
  • Recommends positioning for a flatter SEK 5y/10y vs USD 5y/10y curve with 1y fwd start; spread currently at 43bps, longer term target 0bps
To contact the reporter on this story: Love Liman in Stockholm at jliman1@bloomberg.net To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net Neil Chatterjee

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
1083Z SS (Sveriges Riksbank)
MPANQ US (Mariner Post-Acute Network)

People
Jussi Hiljanen (Skandinaviska Enskilda Banken AB)

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