International Bond Research

6th Floor, Candlewick House
120 Cannon Street
London
EC4N 6AS
International Bond Research
Tuesday 28th October 2014
Sweden
The Swedish Riksbank cut interest rates by 25bp to 0.00%, surpassing expectations of a cut to just 0.1%. EURSEK hit a 3 year
high with a sharp fall in the Swedish Krona; USDSEK reached a 4 year high to trade at 7.356, taking USDSEK gains to 16.2% in
2014. Swedish bond yields have been falling steadily over the year, with a rate cut widely priced in.
In their statement, the Riksbank said “The Swedish economy is relatively strong and economic activity is continuing to
improve,” but a rate cut still ensued. This was instigated by low inflation in the country which is not expected to pick up u ntil
2016, at a low of -0.4% in August. Retail sales data also was weaker, falling to 2.8% from 4.7% (YoY) and unemployment
remains persistently high at 7.2%with the Riksbank revising unemployment figures up at 7.4% in 2015 and 6.9% in 2016.
Whilst the rate cut is likely to instigate lending and investment in the economy, it has no accompanying easing policy which has
tended to come with a rate cut since the crisis. We see further easing measures being introduced in the near term. The bank
looks to be saving policy measures for later as they see whether this historical move will stimulate the historically success ful
economy.
Uncertainty is exacerbated in Sweden by the coalition government that came into power in September. There is expected to
be disagreements and consequential delays in government budgets as diverging policies are addressed.
In September, we called to sell Swedish debt with further downside in the currency expected. This remains, with the Krona
likely to settle at current levels but with the central bank suggesting rates will stay low until mid -2016, their outlook on
inflation is cautious. We further recommend steering clear of Swedish debt until there is come clear direction from the centr al
bank as to what will be next.
Swedish sovereign yield curve present vs. 1 year ago
source: Bloomberg
Anasakti Thaker
D: 0207 398 3114
www.KingandShaxson.com
Page 1 of 3
INTERNATIONAL DESK
E: [email protected]
6th Floor, Candlewick House
120 Cannon Street
London
EC4N 6AS
International Bond Research
Tuesday 28th October 2014
INTERNATIONAL BOND COMPARISONS
yield (s/a)
yield change yield change return MTD
UK
US
Australia
Canada
Japan
Germany
France
Netherlands
Austria
Switzerland
Sweden
Denmark
Spain
Italy
New Zealand
Anasakti Thaker
D: 0207 398 3114
2 yr
5 yr
10 yr
30 yr
2 yr
3yr
5 yr
10 yr
30 yr
2 yr
5 yr
10 yr
2 yr
5 yr
10 yr
30 yr
2 yr
5 yr
10 yr
30 yr
2 yr
5 yr
10 yr
30 yr
2yr
5yr
10yr
30yr
1 yr
5 yr
10 yr
30 yr
2 yr
5 yr
10 yr
25 yr
2 yr
5 yr
10 yr
20yr
2 yr
5 yr
10 yr
26 yr
2 yr
5 yr
10 yr
26 yr
2 yr
5 yr
10 yr
28 yr
2 yr
5 yr
10 yr
30 yr
2 yr
5 yr
10 yr
UKT 4 09/2016
UKT 1.75 07/2019
UKT 2.75 09/2024
UKT 3.25 01/44
912828F47
912828F54
912828F39
912828D56
912810RH3
EC575249 Corp
EK3821791
EJ2445694
EK4387479
EK1739599
EJ7362241
EI7057215
EK5229738
EK4879822
EK4690054
EK4826393
EK4355757
EK4585510
EK4694379
EK0809500
EK1774786
EK3340909
EK3074136
EJ6098374
EJ4989046
EK4197019
EK1418137
EK0414632
EF3754068
EJ2583262
EK3001824
EG1036748
EC394599 Corp
ED4438336
EJ1752710
SWISS 2.5 3/36
EF0868820
EH0398089
EK0417692
EH7669102
EI5589029
EH6950768
EK2541788
EH6131138
EI7927748
EH8448167
EK3289700
ED7737726
EJ6263705
EK3526614
EK0933524
EJ6794667
EC935138
EJ6281665
EI7035203
0.64
1.50
2.21
2.93
0.38
0.81
1.49
2.26
3.04
2.54
2.85
3.30
1.00
1.50
2.01
2.56
0.02
0.12
0.47
1.61
-0.05
0.15
0.87
1.78
0.02
0.38
1.28
2.37
-0.01
0.30
1.04
1.82
-0.01
0.24
1.10
1.76
-0.08
0.07
0.48
0.98
0.02
0.34
1.24
1.24
-0.01
0.22
1.12
1.74
0.49
0.96
2.14
3.26
0.66
1.28
2.55
3.82
3.52
3.87
4.01
www.KingandShaxson.com
Page 2 of 3
on day %
-0.03
-0.02
-0.02
-0.02
-0.00
-0.01
-0.01
-0.01
-0.01
0.03
0.03
0.02
-0.00
0.00
0.00
-0.00
0.00
0.00
0.00
0.01
-0.01
-0.01
-0.02
-0.04
-0.01
-0.01
-0.02
-0.03
-0.00
-0.01
-0.02
-0.04
-0.01
-0.01
-0.02
-0.03
-0.00
-0.00
0.00
0.00
-0.00
-0.03
-0.02
-0.02
-0.01
-0.02
-0.02
-0.04
-0.01
-0.02
-0.03
-0.03
0.01
0.04
0.04
-0.04
0.01
-0.01
0.00
MTD %
-0.18
-0.27
-0.22
-0.13
-0.19
N/A
-0.27
-0.23
-0.16
-0.10
-0.15
-0.18
-0.14
-0.13
-0.13
-0.11
-0.06
-0.05
-0.06
0.01
0.04
0.01
-0.08
-0.09
0.03
0.04
-0.00
0.02
0.02
-0.00
-0.05
-0.08
0.02
0.02
-0.05
-0.09
-0.00
0.01
0.00
-0.05
-0.13
-0.22
-0.24
-0.24
0.03
-0.00
-0.09
-0.10
0.17
0.07
-0.00
0.04
0.31
0.26
0.22
0.19
-0.02
-0.19
-0.13
(local CCY)
3.22
2.68
4.09
5.09
0.77
N/A
2.72
3.99
5.74
4.59
3.02
3.96
1.11
2.02
3.09
4.66
0.19
0.42
0.95
1.20
-0.07
0.16
1.55
3.93
0.12
0.17
1.37
1.82
-0.04
0.23
1.88
3.74
2.76
1.28
1.71
3.87
1.45
1.96
0.87
2.73
2.37
3.69
4.07
4.07
1.73
2.55
2.22
4.16
2.65
2.51
2.12
2.31
1.21
0.00
0.90
-0.39
4.72
3.60
4.98
Duration
1.79
4.51
8.60
18.93
1.91
2.93
4.73
8.76
19.54
2.16
4.68
8.37
1.99
4.64
8.52
15.02
1.96
4.86
9.48
20.28
1.88
4.92
9.36
22.79
2.06
5.00
9.20
20.55
1.46
5.18
8.91
22.52
1.84
4.45
9.30
16.03
1.93
4.27
9.10
14.53
1.67
4.01
9.38
17.66
1.97
4.56
10.01
17.02
1.89
4.47
8.83
15.02
1.51
4.59
8.36
15.68
0.46
5.06
6.96
INTERNATIONAL DESK
E: [email protected]
Tuesday 28th October 2014
sell
buy
10yr
GLOBAL
UK
US
Japan
Euro
10yr
DOLLAR
US
Australia
Canada
NZ
UK
-26
-63
-69
sell
US
104
-25
313
EUROPE
Belgium
Denmark
France
Switzerland
Austria
Italy
Netherlands
Spain
Sweden
Spread to Germany
2 yr
-1
4
6
-4
4
71
3
54
7
US
-6
Japan
174
179
Euro
134
139
-2
Canada
25
-128
NZ
-174
-71
-199
-37
-43
Australia
-104
-128
98
252
10 yr
-11
25
41
-39
23
168
17
127
38
The information used here is obtained from sources that we consider to be reliable but its accuracy and completeness cannot be guaranteed. The
opinions and conclusions contained are those of King & Shaxson Limited. ("K&S"), and are subject to change without notice. No responsibility is taken
for any losses, including any consequential loss, which may be incurred by acting upon such recommendations or information.
Whilst all reasonable care has been taken to ensure that the facts stated herein are accurate and that the forecasts opinions and expectations
contained herein are fair and reasonable, neither the author nor K&S has verified the information contained herein and accordingly none of the author,
K&S nor any of their respective directors, officers or employees makes any representation or warranty, express or implied as to the accuracy or
completeness of the information or opinions contained herein and shall not be in any way responsible or liable for the contents hereof and no reliance
should be placed on the accuracy, fairness or completeness of the information contained in this document. No person accepts any liability whatsoever
for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection therewith. Nothing in this paragraph
shall exclude liability for any representations or warranties made fraudulently. The material does not attempt to describe all the economic, political,
competitive and other factors that underlie any estimates, forecasts, or opinions, or potential changes that could affect the assumptions on which these
estimates, forecasts and opinions are based. K&S makes no representation that the information is current. In particular, but without limiting the
preceding sentence, statements of fact or opinion regarding securities, investments, financial products, companies, markets, territories or particular
circumstances may not be up-to-date or may not represent the current opinion of K&S.
Any opinions, forecasts or estimates herein constitute a judgment as at the date of this report. There can be no assurance that future results or events
will be consistent with any such opinions, forecasts or estimates. This information is subject to change without notice. It may be incomplete or
condensed and it may not contain all material information concerning the Company.
This document does not constitute or form part of and should not be construed as any offer for sale or purchase of (or solicitation of or invitation to
make any offer to buy or sell) any securities nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment
whatsoever.
The information contained in this transmission is legally privileged and confidential information intended only for the use of the individual or entity
named above. If the reader of this message is not the intended recipient you are hereby notified that any dissemination, distribution or copy of this
facsimile or any parts of it is strictly prohibited. If you have received this facsimile in error, please notify us immediately by telephone +44 (0)20 7426
5950 and speak to Compliance).
King & Shaxson Limited Reg. No. 869780, member of the London Stock Exchange, King & Shaxson Capital Limited Reg. No. 2863591and King & Shaxson
Asset Management Limited Reg. No. 3870667. The Registered Office for all companies is 6th Floor, Candlewick House, 120 Cannon Street, London,
EC4N 6AS. All companies are registered in England and are part of the PhillipCapital Group.
King & Shaxson Capital Limited (FSA Reg. No. 169760), King & Shaxson Limited (FSA Reg. No. 179213), and King & Shaxson Asset Management Limited
(FSA Reg. No. 193698) are Authorised and Regulated by the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.
Anasakti Thaker
D: 0207 398 3114
www.KingandShaxson.com
Page 3 of 3
INTERNATIONAL DESK
E: [email protected]