SWEDEN: Muted Underlying Inflation Pressures Could Temper Hawkish Repricing
Swedish seasonally adjusted and inflation breadth metrics suggest underlying pressures are muted, which is notable given CPIF ex-energy will mechanically be pulled even lower next year due to the food VAT cut. The Riksbank will likely assume that the ongoing economic recovery will support demand-pull inflation (ex-energy and food) in 2026, keeping the overall outlook consistent with the target. However, if this fails to materialise, and below-target inflation filters into longer-term inflation expectations, it would work against recent hawkish repricing in SEK rates which now fully price a hike by the end of next year.
- On a seasonally adjusted basis using the X-13 methodology, we estimate sequential CPIF ex-energy inflation at 0.00% M/M, an eleven-month low. That pulled 3m/3m annualised inflation down to a multi-year low of 1.17% (vs 1.66% prior).
- The proportion of CPI subcomponents with annual inflation rates below 1% increased to 52%, the most since 2016.
- At the sub-component level, there was a welcomed pullback in food inflation to 2.38% Y/Y (vs 2.82% prior), the lowest since January.
- As anticipated by analysts ahead of the release, there was some unwind in goods inflation, likely owing to Black week/Black Friday. Clothing and footwear inflation was 0.56% Y/Y (vs 1.44% prior). Other recreation and culture goods also eased, alongside vehicle inflation.
- On the services side, recreation and culture services, restaurants and hotels, and insurance inflation were notable downside drivers. Volatile items such as package holidays and airfares also eased.
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WTI TECHS: (Z5) Bullish Corrective Cycle
- RES 4: $71.47 - High Jun 23 and a key medium-term resistance
- RES 3: $67.68 - High Jul 30
- RES 2: $65.77/68.43 - High Sep 26 and key resistance
- RES 1: $62.59 - High Oct 24
- PRICE: $59.81 @ 07:19 GMT Nov 11
- SUP 1: $58.83/55.96 - Low Nov 6 / Low Oct 20 and bear trigger
- SUP 2: $54.85 - Low May 5
- SUP 3: $54.16 - Low Apr 9 and a key support
- SUP 4: $53.23 - 1.764 proj of the Jul 30 - Aug 13 - Sep 26 price swing
Recent weakness in WTI futures appears to be a flag formation - a bullish continuation pattern. This suggests that an upward corrective cycle remains intact for now. Price has recently traded through the 50-day EMA, at $60.84, signalling scope for a stronger recovery. Note too that resistance at $62.34, the Oct 8 high, has been pierced. A clear move through it would expose key resistance at $65.77, Sep 26 high. The bear trigger is $55.96, the Oct 20 low.
GOLD TECHS: Recovery Signals The End Of A Corrective Phase
- RES 4: $4404.9 - 3.500 proj of the May 15 - Jun 16 - 30 price swing
- RES 3: $4400.0 - Round number resistance
- RES 2: $4381.5 - High Oct 20 and bull trigger
- RES 1: $4161.4 - High Oct 22
- PRICE: $4130.1 @ 07:25 GMT Nov 11
- SUP 1: $3998.7 - Low Nov 10
- SUP 2: $3890.0 - 50-day EMA
- SUP 3: $3800.00 Round number support
- SUP 4: $3751.3 - 50.0% retracement of the May 15 - Oct 20 bull leg
The downleg in Gold since Oct 20 appears to have been a correction and has allowed an overbought condition to unwind. Recent gains also suggest the correction is over. Price remains above a key support at the 50-day EMA, at $3890.0.0. Clearance of this EMA would signal scope for a deeper retracement. Initial resistance is at $4161.4, the Oct 22 high. A stronger recovery would refocus attention on $4381.5, the Oct 20 high and bull trigger.
BRENT TECHS: (F6) Bull Flag Formation
- RES 4: $71.45 - 76.4% retracement of the Jun 23 - Oct 20 bear leg
- RES 3: $70.69 - High Jul 30
- RES 2: $69.29 - High Sep 26 and a key resistance
- RES 1: $65.98 - High Oct 9
- PRICE: $63.79 @ 07:08 GMT Nov 11
- SUP 1: $62.84/59.97 - Low Nov 6 / 20 and the bear trigger
- SUP 2: $58.72 - Low May 5
- SUP 3: $57.99 - Low Apr 9 and a key support
- SUP 4: $56.05 - 2.00 proj of the Jul 30 - Aug 13 - Sep 26 price swing
Recent activity in Brent futures appears to be a flag formation - a bullish continuation pattern. This suggests that a corrective cycle remains intact for now. Price has recently traded through the 50-day EMA, at $64.56. Clearance of this hurdle signals scope for a stronger recovery. The next resistance to monitor is $65.98, the Oct 9 high. A clear breach of it would expose a key resistance at $69.29, the Sep 26 high. Key support lies at $59.97, Oct 20 low.
