Monthly Comment November 2023

The negative market movements we observed during September and October shifted to a significantly more positive sentiment in November. Falling interest rates and declining inflation figures raised hopes that the interest rate hike cycle had peaked for now, and interest rate cuts might occur sooner than expected. Commodity prices are falling; for instance, both wheat and corn are at three-year lows, and Brent oil is trading around $75 despite the tensions in the Middle East. The ECB, FED, and Riksbanken all kept their policy rates unchanged, further supporting the idea that the interest rate peak has been reached. However, they emphasized being data-driven and ready to continue with rate hikes if necessary. For Sweden, GDP decreased for the second consecutive quarter, suggesting a recession. Simultaneously, the Swedish krona strengthened significantly, around 6% against the euro. The Riksbank’s purchase of Swedish kronor in the currency reserve explains part of this movement.