Bonds in Sweden

[lordmetroid]

If Sweden was using the Euro as the currency rather than our own SEK I would be very positive to buying German bonds and everything else denominated in Euros. However, as we still control our own currency thank god. I rather not use anything Euro. The currency was doomed at its inception due to systemic errors such as no wealth transfers to aid the poorer regions, no common financial policy. It is pretty obvious that Euro can not last unless they completely centralize and the national banks and govern all fiscal policies from brussels. Something I rather not see happening. The Eurocrats already have too much power without any accountability.

[Lang]

Maybe a foreign broker would be able to buy Swedish bonds for you? It's kind of ridiculous but it's a possibility.

[lordmetroid]

I have been thinking how to solve the long term bond situation in Sweden.

Bonds are intended for deflationary periods as they have relative high rates compared to bills and they do so for a long period. Hence in times of deflation, the bonds dividends will become worth more and more and the demand for bonds will rise and I would suspect the price as well.

Perhaps a diversified mix of US, Europe and Asian long term bonds will provide the same function. If the SEK is experience deflation, getting dividends from other countries should be great, right? Am I thinking about this backwards?

[Lang]

That's not a good idea, in my opinion. Countries that experience prolonged deflation see their currencies strengthen over time. So if you buy US, Europe and Asian long term bonds, a weakening of the USD, EUR, JPY, etc. against the SEK is very likely to wipe out your gains, given the low interest rates everywhere right now. Furthermore, Sweden currently has negative interest rates, which makes hedging the currency moves even costlier.

[lordmetroid]

I could either use TLT(green), or a Mutual fund with an investment profile of 10 year bonds of the Swedish state, municipalities, mortgages and very credit worthy corporations(yellow). 10 years is pretty much the longest duration you can get in the Swedish bond market.

Which one would be preferable?

[img width=500]http://i.imgur.com/Aif92pz.png[/img]

[dualstow]

More Swedish rate cuts? Ouch / aj!

Another spark to today’s selloff was a surprise move by Sweden’s central bank, the Riksbank, to cut its main interest rate and push it even further into negative territory. The bank cut the rate by 0.15% to minus 0.5%, and hinted that more cuts could be coming.

The move came earlier than expected, UniCredit’s Chiara Silvestre wrote. The firm had expected something like this in April, not now. “Today’s action hints at the Riksbank’s willingness to forearm itself also from the ECB’s upcoming action expected in March,” she said.

http://blogs.wsj.com/moneybeat/2016/02/ ... -analysis/

Just a side note: I've never seen 'forearm' used as a verb before.

[Lang]

The ECB and the Swedish Riksbank are waging war with each other, each trying to make its currency weaker. Whoever wins, we lose.