RIKSBANK: VIEW: DNB Now Expect June Riksbank Cut
DNB now expect the Riksbank to cut rates by 25bp to 2.00% at the June meeting, having previously expected no further cuts from the current level of 2.25%. They continue to expect two rate hikes of 25bp each in early 2027, “as a response to gradually increasing inflation”, bringing the policy rate to 2.50%.
- “In our baseline scenario, we expect the existing tariff regime to persist for the next three years, meaning that most countries' exports will face an average tariff of 10%, while Chinese exports will continue to incur tariffs of around 40%. High economic and political uncertainty is likely to exert a negative influence on global trade and economic activity”.
- Adjustments to Swedish macroeconomic projections: “We now expect GDP growth of 1.8% in 2025 (2.1%), followed by growth of 2.2% in 2026. Swedish foreign trade will be impacted, primarily in an indirect manner, contingent on the trajectory of economic activity in Europe”.
- “We maintain our belief that the significant improvement in households' real disposable income this year will lead to increased consumption, although this growth is expected to be gradual. For 2025, we forecast a growth rate of 1.8% (2.2%), followed by a growth of 2.0% in 2026”.
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MNI: US MAR INDUSTRIAL PROD -0.3%; CAP UTIL 77.8%
- MNI: US MAR INDUSTRIAL PROD -0.3%; CAP UTIL 77.8%
- US FEB IP REV TO +0.8%; CAP UTIL REV 78.2%
- US MAR MFG OUTPUT +0.3%
BONDS: Incremental Fresh Session Lows For TY Futures Before Bonds Stabilise
Post-data reaction and fresh session highs for crude see TY futures register an incremental session low, before finding a base as crude pulls back from best levels and e-mini futures edge lower, allowing Bund and gilt futures to find support before bears can test session lows.
EUROZONE DATA: Easter Timing Weighs On Services Inf, Other Components Sticker
The March pullback in Eurozone services inflation was heavily impacted by the timing of Easter, with non-travel/tourism related categories looking firmer. While this won’t stand in the way of a 25bp cut on Thursday, it may add tension within the Governing Council around how far into the 1.75-2.25% neutral range the ECB can go. For now, growth risks related to tariffs and associated uncertainty clearly dominate the ECB’s reaction function, but services stickiness adds risk to sub-2% policy rate forecasts.
- Annual services inflation was 3.45% Y/Y, versus a 3.42% flash and 3.68% in February).
- Package holiday inflation was 0.87% M/M, corresponding to a 2.92% Y/Y rate (vs 7.94% prior). That’s likely due to the timing of Easter, which fell in March last year but is in mid/late-April this year. Accommodation services (4.11% Y/Y vs 4.64% prior) and airfares (-4.54% Y/Y vs 1.52% prior) also eased, also driven by Easter-timing effects.
- Meanwhile, other services categories were stickier. Services related to recreation and personal care, excluding package holidays and accommodation ticked up to 3.72% Y/Y (vs 3.65% prior), while communication, housing and miscellaneous services inflation also rose on an annual basis.
- In the latter category, we note that insurance inflation re-accelerated to 8.78% Y/Y, from 7.77% in February and 8.04% in January.
- The ECB’s seasonally adjusted services inflation index was revised up 0.03pp to 0.30% M/M in March, after incorporating the final Eurostat data from this morning (NSA monthly services inflation was revised to 0.44% vs 0.41% flash). That’s then the fourth consecutive month that sequential services inflation has rounded to 0.3% - almost 4% on an annualised basis.
