MNI Riksbank Review - Nov 2021: First step from ultra-dovishness

• Last week's Riksbank meeting saw little reaction in currency markets but saw a widening of covered bond spreads as the breakdown of QE purchases in Q1-22 saw a different breakdown than the market expected.
• We think the main reason for the lower allocation of covered bonds is likely an intention from the Riksbank to derisk its balance sheet from private sector assets.
• Last week's meeting was the first step away from uber-dovishness and (without the caveat of Omicron) we think that the Riksbank would have expected to move further from ultra-accomodative policy in its next meeting. If reinvestments are to slow further, covered bonds look vulnerable to another cut in Riksbank purchases.

MNI Riksbank Review - Nov 2021.pdf