The UK and US markets were closed yesterday, but in the European markets bond yields declined and the curve flattened from the long end. Spreads between the core-EU and periphery were stable despite the Spanish government calling a snap election for 30 July after losing in the local elections.
Next week, the ECB will meet to deliver another rate hike in its hiking cycle that started in July last year. This time, the question is whether it will slow the hiking pace to 25bp or continue to hike once more by 50bp. We believe it will be a 50bp compromise deal with no specific forward guidance (nor guidance on balance sheet normalisation in H2 yet), but repeating a data-dependent approach to future policy decisions.
Sweden has long had one of Europe’s hottest housing markets, but prices have tumbled, and are not set to recover for a long time, according to Danske Bank.