Summary of the market’s focus during the month:
Slowing Swedish economy
Swedish GDP fell by 1.5% in the second quarter and by 2.4% over the past year. The figures were significantly lower than both the market’s and the Riksbank’s forecasts. The number of bankruptcies continued to rise and reached record levels in June. It is mainly companies in the retail, construction and restaurant sectors that have been affected, and this can largely be explained by lingering effects from the pandemic.
A number of central banks, including the Fed, ECB and Bank of Canada raised their key interest rates in line with expectations. Both the US and European central banks underlined that their future actions will depend on incoming data. This was well received by markets, which hope that the rate hike cycles are coming to an end. The members of the Riksbank remain concerned about high inflation and the weak Swedish exchange rate, which is considered to have increased the likelihood of further hikes by the Riksbank.
Strong company reports for the second quarter
The companies’ reports for the second quarter of 2023 have shown continued strong development for most companies. However, expectations are high and tolerance for deviations has been low and the negative price reactions to weak reports have in many cases been large. The major Nordic banks reported strong results with low credit losses, and it is also interesting to note that most banks chose to downplay the risk of their loans to commercial real estate companies.
The development of fixed income funds
Simplicity Likviditet: +0.40%
Simplicity Global Corporate Bond: +1.07%
Simplicity High Yield:+0.99%