SWEDEN: NDO Forecast Error Tightens In February
The Swedish budget balance saw a surplus of SEK74.0bln in February, after posting a deficit the two months prior. The National Debt Office (NDO) forecasted a surplus of SEK60.9bln in its November 2024 report, which sees the cumulative forecast error since November move to -SEK5bln from -SEK18bln prior.
- The higher-than-expected surplus was due to tax revenues printing SEK15bln above NDO expectations.
- All else equal, this reduces some of the pressure for the NDO to upgrade its borrowing requirement at its next update on May 22. However the latest shifts in the EU’s defence spending prospects may still add upside issuance risks.
- We nonetheless note that Swedish defence expenditure is already expected to be above NATO’s 2% target through 2025-2030 (~2.4% of GDP in 2025, rising to 2.6% by 2028).
- The 10-year SGB/Bund spread closed at -25.9bps on Wednesday, following Germany's fiscal announcement. This was the tightest level since November 1. The spread has since moved away from narrowest levels though, closing at -17.7bps yesterday.
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RATINGS: Moody's Affirmed The EFSF On Tuesday
Moody’s affirmed the European Financial Stability Facility (EFSF) at Aaa; Outlook stable in an ad-hoc ratings announcement after the close on Tuesday.
BTP TECHS: (H5) Bullish Theme
- RES 4: 122.85 High Dec 12
- RES 3: 121.88 76.4% retracement of the Dec 11 - Jan 13 bear leg
- RES 2: 120.98 61.8% retracement of the Dec 11 - Jan 13 bear leg
- RES 1: 120.45 HIgh Jan 5
- PRICE: 120.26 @ Close Feb 3
- SUP 1: 119.38 20-day EMA
- SUP 2: 118.65/117.16 Low Jan 24 / 13 and the bear trigger
- SUP 3: 116.59 76.4% retrace of the Jun - Dec ‘24 bull cycle (cont)
- SUP 4: 116.07 Low Jul 8 ‘24 (cont)
A corrective phase in BTP futures remains intact.The latest move higher has resulted in a breach of both the 20- and 50- day EMAs. This signals scope for an extension of the bull cycle and sights are on 120.98, a Fibonacci retracement. On the downside, initial key support to watch lies at 118.65, the Jan 24 low. Clearance of this price point would highlight a reversal and the end of the correction.
EURJPY TECHS: Bearish Outlook
- RES 4: 164.90 High Dec 30 and a key short-term resistance
- RES 3: 164.08 High Jan 24
- RES 2: 161.90 50-day EMA
- RES 1: 160.70 High Feb 4
- PRICE: 159.21 @ 07:11 GMT Feb 5
- SUP 1: 157.97 Low Feb 3
- SUP 2: 156.99 Low Dec 4
- SUP 3: 156.18 Low Dec 3 and a key support
- SUP 4: 1155.15 Low Sep 16 ‘24
A bear threat in EURJPY remains present. The cross traded to a fresh short-term cycle low Monday, confirming a resumption of the bear leg that started Dec 30 last year. An important retracement point at 158.24, 76.4% of the Dec 3 - 30 bull cycle, has been pierced. A clear break of it would signal scope for an extension towards 156.18, the Dec 3 low. On the upside, initial firm resistance to watch, and a pivot level, is 161.90, the 50-day EMA.
