SWEDEN: PM Andersson Polls Best Among Voters, But Election Still On Knife Edge

Sep-06 08:51

Latest opinion polling ahead of Sunday's general election shows PM Magdalenda Andersson with the strongest approval ratings of any senior party leader. However, despite her popularity her centre-left coalition is not assured of a majority in parliament, with the election outcome still on a knife edge according to polls.

  • Sifo poll: Party leaders' net approval rating: Andersson (Social Democrats): +34, Kristersson (Moderates): -13, Pehrson (Liberals): -17, Lööf (Centre Party): -18, Busch (Christian Democrats): -25, Dadgostar (Left Party): -27, Akesson (Sweden Democrats): -27, Bolund (Greens): -48, Stenevi (Greens): -50. Fieldwork: 3-5 Sep. '22. Sample size: 1,009
  • The overall party opinion polling continues to show the centre-left and centre-right groupings of parties neck-and-neck in the race for a majority in the Riksdag (parliament).
  • The looming question is whether the more centrist parties in the right-leaning bloc (notably the Liberals) are willing to work with the right-wing populist Sweden Democrats in the event that bloc wins an overall majority. Either way, a lengthy period of negotiation post-election is likely.
Chart 1. Net Approval Ratings For Party Leaders, %

Source: Sifo, @europeelects

Historical bullets

US TSYS: What Recession?

Aug-05 19:35

Rates trading weaker after the bell, just off midday session lows after FI markets gapped lower on stronger than expected jobs gains for July: +528k vs. +250k est, unemployment rate dropped a tenth to 3.5% after flattening out at 3.6% for six months. Average hourly earnings rose 0.5%, a tenth faster than in June. Better than expected data spurred heavy selling across the board but particularly in shorts to intermediates as yield curves extend inversion to new 22 year lows (2s10s -44.034).

  • Heavy short end selling included 5Y Blocks as strong data spurs recession position unwinds as payrolls close gap with pre-pandemic levels, 75bp rate hike in September getting priced in again.
  • Some faded the deep curve inversions w/ Block buying over 15,000 TUU2, 2s10s currently -5.686 at -41.947. Currently, 2-Yr yield is up 20.2bps at 3.2442%, 5-Yr is up 17.9bps at 2.9709%, 10-Yr is up 14.8bps at 2.836%, and 30-Yr is up 9.9bps at 3.0638%.
  • Cross asset update: Stocks marginally lower/off lows (SPX eminis -15.0 at 4137.25 vs. 4104.25 low); Spot Gold weaker -16.10 at 1775.18; Crude weaker (WTI -0.39 at 88.15).
  • Data: Slow start to next week, nothing scheduled for Monday except US Tsy bill auctions ($54B 13W, $42B 26W). Tuesday picks up with Nonfarm Productivity (-4.6% est) and Unit Labor Costs (9.8% est), US Tsy $34B 52W bill and $42B 3Y Note auctions.

US: Late Corporate Credit Update, Hold Narrow Range

Aug-05 19:26

Investment-grade corporate credit risk held near steady Friday as stocks see-sawed off post-jobs data lows. Currently, SPX eminis trade SPX eminis trade -21.5 (-0.52%) at 4131.75; DJIA -14.29 (-0.04%) at 32715.8; Nasdaq -121.6 (-1%) at 12599.4.

  • Investment grade risk measured by Markit's CDXIG5 index +0.295 to 81.208; CDXHY5 high yield index at 101.366 (+0.137).
  • Outperforming credit sectors (tighter or least wide): Materials (-2.0) followed by Senior and subordinated Financials (-1.7, -1.4 respectively), and Consumer Discretionary (-0.7)
  • Lagging sectors (wider or least narrow): Communications (+0.8), Health Care (+0.4) followed by Technology and Industrials (+0.2).

US TSYS: Eurodollar/SOFR/ Tsy Options Roundup

Aug-05 19:23

Better buyers of FI puts in the latter half of the week made the right call as underlying futures came under heavy pressure early Friday after an unexpectedly strong July employment report. July jobs gained +528k vs. +250k est. while, unemployment rate dropped a tenth to 3.5% after flattening out at 3.6% for six months. Average hourly earnings rose 0.5%, a tenth faster than in June.

  • Surge of selling in shorts to intermediates, yield curves extended inversion to new 22 year lows (2s10s -44.034) as pricing of another 75bp rate hike in September returned. Friday's option volume was rather disappointing, however, victim to summer trade malaise.
  • Salient trade included +7,500 October SOFR 96.00/96.25 put spds 1.0 over 97.00 calls as well as a sale of -10,000 March'23 SOFR 98.25 calls .75 over 95.25/95.56/96.00 put flys. An early Eurodollar block post had -11,500 Mar 96.37/96.87 1x2 call spds, 5.0 vs. 11,500 Mar 95.50/96.00 2x1 put spds, 2.0. Meanwhile, Treasury options included +21,000 (7.5k blocked) FVV 111/111.75 put spds, 9.5.