Weak Inflation & Lower Rates

The Swedish Riksbank cut interest rates to -0.50% after having them left them at -0.35% since July of 2015. The Central Bank will continue its Government bond purchases over the first half as usual, reinvesting principal. Policy makers reiterated that the recent global turbulence, a continuing drop in energy prices and a relatively strong currency may push inflation into negative territory, fears also echoed by the President of the European Central Bank. The Swedish Central Bank Governor Stefan Ingves stated that the economy continues to grow, with annualized GDP expanding at 3.90% but inflation remains worrisome, stagnating at 0.10% after having risen back from deflationary levels. The Governor also expressed that the Central Bank is ready to use all means necessary in order to revive inflation. The Swedish Krona weakened against the US dollar, with USDSEK rallying to 8.4742 before pulling back.

The United States Department of Labor reported a decline in Americans filing for unemployment for the first time in weeks for the period ending February 6^th. The value was reported to have dropped to 269,000, far from prior week’s 285,000 and beating estimates of 281,000. The 4-week average for jobless claims also declined to 281,250 from previous value of 284,750. According to the Labor Department, this is the 49^th-consecutive week that claims have stayed below the healthy labor market level of 300,000. The numbers reflect growing confidence that employers will hold onto their employees and hire further as they expect the economy to continue growing. This latest results have offset speculation that jobless claims will continue to rise amid a strong dollar, weakness in global financial markets and spending cuts in the energy sector.