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Financial markets

Governor Signe Krogstrup: Shifting risks and hedging in global financial markets

Uncertainty in global financial markets has subsided after temporary turmoil following the U.S. tariff announcements in April 2025. Looking ahead, several developments warrant attention: rising public debt in some countries, investors’ perception of “safe” investments, as well as equity valuations and concentration in the technology sector. These points were highlighted by Governor Signe Krogstrup at Nykredit Capital Markets Day on 8 October, 2025.

After the U.S. tariff announcements in April 2025, there were fluctuations in financial markets. However, this volatility was relatively short-lived. The Danish krone has remained stable. As of the end of September, Danmarks Nationalbank had not intervened in the foreign exchange market since December 2022. This is the longest period without interventions in the history of the fixed exchange rate policy.

Signe Krogstrup notes: “The krone has remained remarkably stable, despite changes in the global trade and financial environment.”

There is still uncertainty in the global economy and trade, but financial markets have been relatively calm since May. However, there are factors that could shift.

Signe Krogstrup highlights three such developments in global markets over the past six months:
“As public debt increases in some countries, the pricing of risk in government bonds may change. In addition, changes in dollar hedging may indicate shifts in investors’ perception of “safety”. Finally, rising equity valuations and concentration risks in the technology sector are worth noting.”

Some countries have borrowed large sums, and their government debt is rising. This can affect the price and risk of their government bonds. There may also be changes in what investors perceive as “safe” investments. As shown in Danmarks Nationalbank’s semi-annual analysis of Monetary and Financial Trends, the weakening of the dollar in April 2025 differed from previous episodes of market turmoil, where the dollar normally strengthens. In addition, there are signs that global investors are hedging a larger share of their dollar risk. This development is also seen in the Danish insurance and pension sector. Although overall financial conditions in Denmark are not assessed to have changed since spring, Danmarks Nationalbank continues to monitor global risks and how they may affect Denmark.

At Nykredit Capital Markets Day, Signe Krogstrup also commented on developments in the global and Danish economy as well as Danish government debt.

The presentation can be found below.

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