SWEDEN: March Economic Tendency Survey Highlights Difficult Riksbank Trade-offs
The March Economic Tendency Indicator highlighted the difficult trade-off faced by the Riksbank going forward. Consumer confidence fell markedly alongside weaker sentiment in the retail and services sectors, but expected price metrics continued to climb. The March meeting minutes (due at 0830GMT) should provide more colour on how each of the Executive Board members perceive these trade-offs.
- Consumer confidence fell markedly in 89.8 (vs 94.6 prior, revised from 95.0 initial), the lowest since April 2024. This reflected a drop in sentiment in the “micro” (i.e. household’s view of their own situation) and “macro” (i.e. household’s view of the general Swedish economic situation) subindices.
- Industry sentiment fell to 99.1 (vs 101.2 prior), reflecting falls in retail and services sentiment, but increases in manufacturing and construction.
- The expected employment balance fell to 4 (vs 6 the prior two months), with retail trade hiring expectations seeing a large fall to 7 (vs 13 in Feb, 9 in Jan).
- Expected prices moved further above the long-run average to 24 in March (vs 22 prior; LR average of 12), again driven by retail trade. The net balance of grocery wholesalers expecting prices to increase in the next 3 months reached 85 (vs 68 prior, LR average of 39), the highest reading since March 2023. This suggests further upside risks to food CPI inflation in the coming months.
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CROSS ASSET: MONTH END EXTENSION
Bloomberg Bonds:
- US Tsys: +0.12yr (Large).
- EU Govies: +0.08yr (Average).
- UK Govies: -0.03yr (non event).
- JGBs: +0.04yr (small).
SILVER TECHS: Bullish Outlook
- RES 4: $35.736 - 1.236 proj of the Feb 14 - Apr 12 - May 2 ‘24 swing
- RES 3: $34.903 - High Oct 23 and the bull trigger
- RES 2: $34.000 - Round number resistance
- RES 1: $33.450 - 76.4% of the Oct 23 - Dec 19 ‘24 bear leg
- PRICE: $32.550 @ 08:18 GMT Feb 24
- SUP 1: $31.979/343 - 20- and 50-day EMA values
- SUP 2: $29.704 - Low Jan 27
- SUP 3: $28.748 - Low Dec 19 and bear trigger
- SUP 4: $28.446 - 76.4% retracement of the Aug 8 - Oct 23 bull cycle
A bull theme in Silver remains intact and the metal is trading closer to its latest highs. Recent gains confirm a resumption of the bull cycle that started Dec 19 and sights are on $33.450, a Fibonacci retracement. Clearance of this level would further strengthen a bull theme. On the downside, key short-term support is seen at 31.343, the 50-day EMA. A clear breach of this level would highlight a potential reversal.
GILTS: Offshore Cues And Roll Flow Dominate
Gilts look offshore for cues, with Friday’s post-settlement rally in core global FI markets at least partially countered by a pullback in Bunds following the result of the German election.
- Gilt futures +12 at 92.53.
- A bullish technical cycle in the contract has moderated but remains in play
- Initial resistance located at thee 50-day EMA (92.83), while initial support comes in at the Feb 20 low (91.78).
- Expect roll activity to continue to dominate (as it has done in early trade today) ahead of Thursday’s first notice for H5, with estimates pointing to just under 20% completion as of Friday’s close (the daily OI update will give greater clarity here).
- Yields ~1bp lower across the curve.
- 10-Year spread to Bunds hovers around 210bp, sticking within the multi-week 203.8-212.5bp closing range.
- Goldman Sachs note that “in the absence of a clear near-term catalyst for the front end, we prefer long positions in the long end, as we expect a decline in Gilt risk premia, and continue to recommend 10s30s flatteners, an expression that should also work should we see ongoing strength in growth.”
- Outside of the previously covered BoE-speak, some focus will fall on Thursday’s meeting between PM Starmer & U.S. President Trump, given Trump’s ever-present market-moving potential.
