Anders Svendsen

🇩🇰Chief Analyst @ Nordea. EUR rates strategy. ECB. Inflation.

[tylermcclellan @tylermacro10]

Ending inflation…for Europe

H/t @agmacro2

[Nordea Markets @NordeaMarkets]

Tune in to our latest Nordea Markets Insights DK podcast with @helgejpedersen, @MadsenMaldia and @SvendsenAnders here (in Danish).
👉 https://t.co/Iqoe23vNbm

#Økonomi #Nordea #Podcast

[Nauseam (in sf!) @ChadNauseam]

"A calculator app? Anyone could make that."

Not true.

A calculator should show you the result of the mathematical expression you entered. That's much, much harder than it sounds.

What I'm about to tell you is the greatest calculator app development story ever told.

[Anders Svendsen @SvendsenAnders]

ECB press conference with no news and then the news follow in “sources”-stories within hours? Considering the sensitivity of the discussions, this is not the way!

[Nordea Markets @NordeaMarkets]

Tune in to our latest Nordea Markets Insights DK podcast with @helgejpedersen and @SvendsenAnders here (in Danish).
👉 https://t.co/0kJKQIbiLu

#Økonomi #Nordea #Podcast

[Anders Svendsen @SvendsenAnders]

Markets flirting with pricing less than 100bp of ECB policy rate cuts in 2025.

[Anders Svendsen @SvendsenAnders]

@BobEUnlimited Thx Bob. Lagarde did put a bit of a lid on in last week.

The lines should still be read as the implied cumulative rate cuts in the calendar years 2024 (dark blue) and 2025 (light blue).

[Frederik Ducrozet @fwred]

🇪🇺 As the ECB gets ready to shift to full (passive) QT in January, the breakdown of the PEPP will be published on a monthly basis (instead of bi-monthly).
For the first time in 10 years, the ECB won't be buying any bonds under either the APP or the PEPP. https://t.co/cCdNNmncwu

[Frederik Ducrozet @fwred]

🇨🇭 The Swiss National Bank cut rates by 50bp to 0.50% - the fourth cut in this cycle, but the first jumbo cut - while keeping an easing bias.
"Underlying inflationary pressure has decreased again", justifying the move. Can the SNB avoid a return to negative rates next year?

[Anders Svendsen @SvendsenAnders]

Call Lagarde dovish if you want, but just as in the past press conferences, there is hardly any guidance on coming policy rate changes. The ECB remains data dependent! The president only tells us the ECBs reaction function to allow us to assess the importance of incoming data.

[Philip Maldia Madsen @MadsenMaldia]

🇺🇸 Everyone thinks the economy will stay strong

Looking ahead, the consensus expectation is that the economy will stay strong, which means that the bar for a positive surprise next year is high. This is an important change compared to the start of this year, when investors feared the economy would fall into a downturn.

The change in the consensus expectation is easy to see when you look at the survey of professional forecasters. The mean expectation is that the economy will grow by about 2% in the first two quarters of the new year, which is almost twice as much as the mean expectation back in the beginning of this year.

[Anders Svendsen @SvendsenAnders]

More 2025-cuts are being priced in. At this time last year, rates dropped like a rock as almost 100bp of rate cuts were added to the pricing for this year.

Chart showing cumulative ECB pricing for the years 2024 and 2025.

[Anders Svendsen @SvendsenAnders]

While the ECB is debating if inflation victory is in sight or already here, markets have taken a clear stance.

This is the yoy-curve for EUR inflation swaps, ie read as implied forward inflation rates on Friday vs 6 months ago.

[Philip Maldia Madsen @MadsenMaldia]

🇺🇸 Trump tariffs will strengthen the US dollar

Many critics say tariffs will put upward pressure on inflation and downward pressure on real economic growth, but that did not actually happen in the trade war against China, when Trump increased the effective tariff rate by about 18%. The reason is that the dollar strengthened by 12-15% against the yuan in anticipation of how tariffs would lower US imports and hurt Chinese exports. The appreciation of the dollar effectively offset the imposed tariff and resulted in China paying for a large part of the tax instead of US consumers. It is hard to predict how much the dollar will offset tariffs in the upcoming trade war, but history suggests that the next iteration of tariffs could lead to substantial dollar appreciation.

[Anders Svendsen @SvendsenAnders]

German ASW tightening continues...

[Anders Svendsen @SvendsenAnders]

So much for the concerningly weak PMI composite employment index...

... the unemployment rate was revised down and is at a record-low of 6.3% in Sep!

[Anders Svendsen @SvendsenAnders]

Core services momentum too high again after some relief in September.

Our note on today's print:
https://t.co/bMfqIMFNNX

[CrossBorder Capital/ GLIndexes @crossbordercap]

H/t @johnauthers Another way of expressing rising US term premia

[Anders Svendsen @SvendsenAnders]

What a difference a week makes

20bp fewer cuts priced through Dec next year

[Ben Acton-Bond @BenActonBond]

🇩🇪 With VW turmoil in the news, the labor market is back in the spotlight. Employment has been revised, we now have a steady declining trend since May. v/u ratio also drifts lower. Positive consumption growth in Q3 is nice, but it may prove unsustainable if more jobs are lost