UKRAINE: Zelenskyy-No Strong Pressure On Russia At Present

• Date $MM Issuer (Priced *, Launch #)
• 03/25 $1B #IDB 5Y SOFR+49
• 03/25 $1B #MuniFin WNG 5Y SOFR+46
• 03/25 $Benchmark LG Energy 3Y +165a, 5Y +175a, 5Y SOFR, 10Y +205a
• 03/25 $Benchmark NWB 3Y SOFR+36
• 03/25 $Benchmark JFM 5Y SOFR+67
• $24.8B Priced Monday

Scandi currencies have comfortably outperformed the G10 basket year-to-date, with SEK strength a notable theme since the start of February. Today’s price action is no different, with EURSEK down 0.6% and USDSEK down 0.7% on the back of a solid recovery in European equities. 

• EURSEK has pierced the March 6 low at 10.8842, a clear breach of which would expose the 61.8% retracement of the November 2021 – September 2023 bull leg at 10.6786. Recovery rallies short of the 20-day EMA at 11.0383 will be considered corrective.
• Downside protection in EURSEK has been increasing in demand through the course of this year, with vol premium of calls over puts at just 0.16 points. We noted yesterday that the 52w Z-score EURSEK 1m risk reversals was comfortably the lowest among G10 FX at -1.62 (see here).
• Initial support in USDSEK is the psychological 10.0000 handle, followed closely by the March 11 low at 9.9796.
• The stronger krona helped pull down import price inflation in the February PPI report, but underlying domestic supply price momentum remains firm. The Riksbank will need to see further easing in “core” domestic supply pressures in the coming months to feel confident that the recent uptick in CPI inflation is temporary. Rate cuts appear off the table until this view is confirmed. 

J.P.Morgan recommend “taking profit on some USD shorts ahead of the key April 2 tariff date and what remains of quarter-end rebalancing flows”. This comes via closing USD shorts vs. NOK, SEK & AUD

• Medium-term they “maintain a bearish USD bias premised on moderating U.S. economic exceptionalism, a carry-to-value rotation and RoW growth catalysts such as Eurozone fiscal policy.”
• This comes via USD shorts in DXY form and vs. EUR. They also maintain a long JPY vs. NZD & USD basket recommendation.