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Swedish 2-year bond yield falls into negative

FXStreet (Mumbai) - The two-year Swedish bond yield fell below 0% today, after the country’s central bank cuts its main interest rate to zero.

The Riksbank cut its main repurchase, or repo, rate from the previous level of 0.25%. The sharp fall in the yields is mainly due to the fact that the markets were expecting the Riksbank to cut rates to 0.05%. Moreover, the inflation in Sweden is stuck near zero for most of this year, well below the target rate of 2%.

The two-year yield, usually considered as a barometer of short term interest rate expectations, has declined below zero levels to trade at -0.044%. The yields were stuck in a range of 0.005% to 0.05% since mid-October. Meanwhile, the ten-year yield has declined to 1.215%.

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