Instant view CPIF-inflation stood at 0.4% y/y in February, as expected. The deviation from the Riksbank’s forecast thus narrowed to 0.1% point, from 0.3% point in January.
• February inflation spot on our forecast • The difference versus the Riksbank’s CPIF forecast narrows to 0.1% point in February. This was the last inflation print before April meeting. • Together with strong Q4 GDP this clearly supports Riksbank on hold in April.
• Dijsselbloem confirms progress on bank resolution • Important Swedish inflation figures for February
An increase in riskaversion with less demand for credits could lead to an increase in the demand for covereds. This would be quite contrary to the behavior of covered bond spreads historically but might be the consequence of the current positioning.
The BoJ kept its policy unchanged today and the positive growth outlook. We expect the bank to stay put until August-September, when consumption tax hike related impacts on Q2 GDP becomes known. We have revised our growth and JPY forecasts slightly, which will be published in the March Economic Outlook on the 12 March.
Bonds performed yesterday – near-term upside potential in yields limited. US equities facing resistance around record-highs. Chinese equities continued to see clear pressure. German banks win concessions in the ECB’s AQR. Rather light calendar. Belgium announces a new 20Y bond –Dutch, German and US auctions on the agenda.