Long-term interest rates have risen significantly in recent weeks and in three months the ten-year-old has risen from 0.91 per cent to 1.63 per cent. A rise in risk-free interest rates challenges the valuation of companies, and several shares have been put to the test. Now long-term interest rates have begun to stabilize.
“Shares recovered well after last week’s fears of interest rates. The fact that the stock market was frightened by the sharp rise in interest rates does not change our view. We are entering an environment with strong economic growth, better earnings and thus a rising stock market. But also higher interest rates “, write the strategists Erik Bruce & Joachim Bernhardsen in Nordea.
The strategists point to more interest rate meetings next week, but that the US will keep the key interest rate unchanged and that Norges Bank will signal that an interest rate increase may come faster. Although a faster rise in interest rates in Norway may give cause for concern about a stronger krone, it does not appear to be a threat according to Bruce and Bernhardsen.
“There are interest rate meetings in the USA, the UK, Japan and Norway. In the US, the Fed will probably raise its view of the economy, but maintain that it is longer until the first interest rate increase than what the market prices. The greatest tension is whether they want to say or do something in response to the strong rise in long-term interest rates. Here at home, there are likely to be signals of a faster rise in interest rates and there are many indications that Norges Bank will be one of the first central banks to raise interest rates.
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