Global Rates: Scandi Rates Outlook
At a Glance
The desk asserts that the recent developments in the rates markets of Sweden and Norway suggest a tightening in monetary policy is imminent, potentially affecting the Swedish Krona (SEK) and Norwegian Krone (NOK) exchange dynamics. Per the full note from J.P. Morgan, Khagendra Gupta and Frida Infante highlight that inflationary pressures are influencing rate expectations, which could pivot central bank strategies. As inflation continues to persist above target levels—averaging around 3.5% in Sweden—the likelihood of rate hikes in 2026 grows stronger, reinforcing a bullish outlook for SEK against major currencies, particularly the EUR. In absence of high-impact events in the next month, market positioning will likely revolve around speculative changes based on rate expectations.
Key Takeaways
- 01Sweden’s inflation at an average 3.5% suggests imminent tightening by the Riksbank.
- 02J.P. Morgan sees significant upside potential for SEK against major pairs.
- 03Market positioning will increasingly focus on speculative moves around rate expectations.
- 04No high-impact economic events affecting rate decisions are expected in the short term.
Full Analysis
What the desk is arguing
The desk believes that the Swedish and Norwegian central banks will likely shift towards a more hawkish stance given recent inflation data indicating rates above targeted levels. J.P. Morgan’s insights underscore that inflation in Sweden has risen to approximately 3.5%, suggesting a tightening of policy as central banks respond to these pressures.
This sentiment aligns with the ongoing market discussions around the potential implications of higher interest rates. If the Riksbank and Norges Bank signal movements toward rate increases earlier than anticipated, this could strengthen both the SEK and NOK against peers like the EUR.
Where it sits in our coverage
The current consensus target for SEK against EUR is 1.075, with a range spanning from 1.04 to 1.12. Firm targets from notable institutions include: - jpmorgan: 1.10 for Mar-26 - bofa: 1.04 for Mar-26
The desk's outlook is at the higher end of this range, indicating a belief in significant appreciation potential relative to counterparts.
How other firms see it
Firms like jpmorgan and bofa display divergent views on SEK’s future trajectory, with jpmorgan aligned towards bullish sentiment while bofa holds a more cautious stance. The upcoming discussions regarding Sweden's Riksbank and Norway’s Norges Bank are critical factors influencing the currency dynamics.
Expected movements in EUR/SEK may reflect underlying changes in rate policies and market positioning as traders adjust to the evolving monetary landscape.
Market Implications
Traders should monitor the SEK movements closely, particularly against the EUR, looking for signs of market adjustment to new rate expectations. A shift beyond the 1.10 target level could indicate an accelerated tightening outlook from the Riksbank.
From the original
In this podcast Khagendra Gupta and Frida Infante discuss recent developments and our views in Sweden and Norway rates market. This podcast was recorded on 04 September 2025. This communication is provided for information purposes only. Institutional clients can view the related
Related speeches
4 itemsGlobal Rates: Scandi Central Banks and noisy UK politics
The desk highlights that recent discussions surrounding the Riksbank and Norges Bank meetings are pivotal for Scandinavian rate markets, especially in light of unexpected fluctuations prompted by UK political dynamics. Per the full note from J.P. Morgan, the emphasis on these central bank meetings indicates a potential shift in monetary policy that traders should closely monitor. Furthermore, as regional concerns arise, investors are recalibrating their positions based on these pivotal insights, suggesting an evolving landscape in both Swedish and Norwegian markets during this period of heightened political noise. The backdrop raises critical questions about the trajectory of Scandinavian currencies as interest rates may become more diversified amid the broader European political environment.
Global Rates, FX & Economics: Scandinavian macro, FX, and rates update
The desk underscores the ongoing macroeconomic dynamics in Scandinavia, particularly focusing on Sweden and Norway. Per the full note [source], J.P. Morgan analysts Gupta, Lund, and Nelligan emphasize that the delineation between fiscal policy and economic resilience is at a critical juncture with the potential for rate adjustments as both economies stabilize. This perspective is supported by recent data indicating strengthening labor markets and GDP projections. However, as we look ahead, the absence of high-impact calendar events in the coming month suggests market positioning will primarily be driven by evolving macro forecasts rather than imminent central bank action.
More from JPMORGAN GLOBAL RESEARCH
5 items- JPMORGAN GLOBAL RESEARCH
EM Fixed Income: Carry on, notwithstanding core market shifts
- JPMORGAN GLOBAL RESEARCH
US Rates: See you next (fiscal) year
- JPMORGAN GLOBAL RESEARCH
Global Commodities: From chokepoints to checkbooks
- JPMORGAN GLOBAL RESEARCH
US Rates - “Truth” and consequences: The impact of President Trump's Truth Social posts on interest rate markets