GILTS: Yields A Little Higher, Support In Futures Holds

• ERH6 98.5625/98.1875ps 1x2 sold at 10.75 down to 10.5 in 20k.

Yesterday:

• ERH6 98.5625/98.1875ps 1x2, sold at 11.25 down to 10.50 in 21.6k.

Highlights from the policy statement:

• "The economic recovery that began last year has lost momentum, and inflation is expected to be somewhat lower than in the previous forecast".
• "The forecast for the policy rate entails some probability of another cut this year. The lower interest rate will stabilise inflation at the target and contribute to strengthening economic activity".
• "However, the outlook for inflation and economic activity is uncertain. There are substantial risks linked to trade policy and the geopolitical tensions, not least as a result of the escalating conflict in the Middle East, which could affect economic developments abroad. These risks and the questions about the strength of domestic demand mean that it is uncertain how quickly the Swedish economy will recover. New information, and how it is expected to affect the outlook for inflation and economic activity, will determine how monetary policy is designed going forward".
• The June rate path appears broadly in line with the analyst previews we had seen, though a little more dovish than MNI had expected

June Rate Path (Source: Riksbank)

• RIKSBANK SEES CHANCE OF ANOTHER CUT IN 2025