Weak growth news was announced this week in Sweden, with final Q3 GDP numbers showing that the economy is contracting (-1.4% y/y) and a NIER tendency survey dropping further, indicating continued weakness. News that supports that the rate hiking cycle has come to an end and that company earnings and valuations are and will be challenged.
Put very simply, although intuitively, net fund flow into risky assets should abate in such a sentiment, and vice versa in fixed income. There seems to be some numerical support here, between, on the one hand, the growth cycle and equity flow (chart 1), and on the other hand, the relatively inverse relationship between equity and bond flow.
