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Svein Aage Aanes

Svein Aage Aanes joined DNB Asset Management in 1998. As Head of Fixed Income and FX, Svein Aage has accumulated close to 25 years experience as a Portfolio Manager. In 2000 he was assigned to head up the team.

Before joining DNB Asset Management, Svein Aage was a senior economist at Den norske Bank. He began his career in 1991 as an Assistant Professor and researcher in economics at the Norwegian School of Economics and Business Administration in Bergen.

Svein Aage holds an MSc in Economics from the Norwegian School of Economics and Business Administration and he has completed a research stay at Harvard University. Svein Aage speaks English, German and Norwegian.


Last year, the USA experienced the sharpest rise in interest rates since the early 1980s. The U.S. Federal Reserve raised the key interest rate by 4.5 percentage points, and by as much as four percentage points from May to December. Such large changes in a short period of time can lead to unpredictable situations in various areas. Once again, the market has been reminded that it is not always easy to predict where vulnerabilities and difficulties might arise. For example, interest rate forecasts are now extremely volatile; just a few weeks ago, the market was expecting a peak of 5.7 percent for the U.S. federal funds rate; now, a peak of around 5 percent is being priced in. It is possible that market participants have changed their minds or that perceptions have shifted to the effect that interest rate hikes could have more negative effects than previously thought.

Many experts have been studying both inflation and the labor market for some time to determine what level of interest rates might be appropriate for the desired monetary policy goals. However, the labor market is a trailing indicator. It takes a while for changes to be reflected in the numbers. The banking crises have put the financial sector back in the spotlight, and the Fed could get support from tightening regulatory requirements. Meanwhile, the U.S. authorities have launched a liquidity package in a very short time. While this is initially welcome, it may also lead to uncertainty if President Biden feels the need to reassure the markets and the public.

Pause on interest rate hikes? Moral dilemma versus clear decisions

We are in a period of interest rate volatility, as often occurs at inflection points when the market is looking for interest rates to peak. When market participants are convinced that we are approaching the interest rate peak, long-term bond yields start to fall again or bond prices start to rise. Even if the acute situation is under control, this development may accompany the market for some time. This could lead to key interest rates no longer meeting the high expectations we saw only recently. For some niche banks, this could be a problem at this point. They have the classic combination of short-term deposits and long maturities on the asset side, which is not typical for diversified banks in the United States. Regulators must always carefully balance acting decisively to safeguard the system against limiting moral hazard - a difficult compromise. If the situation is troubling enough, central banks will first cut interest rates and then stimulate the economy.

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