PHILIPPINES: Tense Situation In Senate After Shots Fired

Although the broader risk backdrop has dominated SEK FX price action since the Iran war started, indications that Swedish retail investors have not abandoned domestic equity funds in favour of foreign peers is relevant to the medium-term flow outlook. 

• Swedish Investment Fund Association members exited equity funds in favour of fixed income and cash in March, with the inception and escalation of the Iran war damaging sentiment.
• The SEK18.4bln net decline in equity fund holdings was mostly accounted for by a SEK12.4bln fall in global funds, while sector-specific funds also saw a SEK6.4bln net outflow. Fixed income funds saw a SEK7.8bln net inflow, implying cash (or at least, non-fund) holdings rose by SEK11bln in March.
• Despite the more material dynamics noted above, March was another month where a (small) net US equity fund outflow came alongside a (small) net Swedish fund inflow. Thus, a broader repatriation theme may still be intact in the retail fund data.

OI data points to modest net long cover (~3K lots or 0.26% of OI) during Friday’s downtick in gilt futures as participants remained hesitant to deploy fresh exposure ahead of the (now broken down) weekend talks between the U.S. & Iran.

• Today’s OI change could be more interesting given the continuation of the move lower in light of the break down of the talks, although bears have been unable to force a test of key support in the contract (87.59) as of yet.

ERM6 97.75c, sold at 3.25 in 25k vs 5k at 97.545.