Currently, a 10 bp increase in short-dated Danish money market rates is priced in within the next 2-3 months. Whether that is too aggressive to a large extent depends on the ECB and a possible enlargement of the ongoing QE programme.
"If the ECB decides to embark on further monetary easing, the first Danish rate hike could be postponed well into 2016 as it probably would lead to a stronger Danish krone against the euro. In case of more severe pressures for a stronger Danish krone, we expect the central bank to once again use the currency reserves as the main instrument", says Nordea Bank.
Due to the high financing requirements and the harm to liquidity, it seems as highly unlikely that the central bank will once more stop the issuance of government bonds, added Nordea Bank.