In focus today
In the UK, Q4 GDP data is released. The November print was stronger than expected and PMIs also improved in January. Thus, the UK economy is experiencing more tailwinds than we have seen in a long time. However, The Bank of England was less optimistic in its economic outlook last week, where the probability of another rate cut at the March meeting increased significantly. Thus, it will be interesting to follow upcoming data out of the UK.
Overnight, China releases home price data for January, which is one of the key gauges for the housing crisis. Prices continued to decline throughout 2025 showing little sign of stabilising and we look for a further decline in January.
In Norway, we get the annual speech from Central Bank Governor Wolden Bache, where we do not expect any signals on monetary policy, but would be very surprised if the monetary policy consequences of AI are not thoroughly discussed.
Economic and market news
What happened overnight
In Sweden, statistics from the Swedish Public Employment Service show that unemployment, measured as those registered with the agency, fell in January from 6.7% to 6.6%. The number of new job vacancies decreased, and redundancies increased. Slightly mixed signals, but in line with our expectations. The statistics from the Swedish Public Employment Service provide a good overview of the labour market situation and have been a reliable leading indicator for other measures of unemployment.
What happened yesterday
In the US, the January Jobs Report surprised to the upside with NFP growth at 130k (DB: 60k, cons: 70k), unemployment rate at 4.3% (DB: 4.4%, cons: 4.4%) and benchmark revisions reducing March 2025 employment by 898k (DB early estimate: -919k). Education and health care drove job gains (+137k), while the public and financial sectors recorded cuts. Despite a higher participation rate, the unemployment rate ticked lower, indicating strong labour demand. UST yields rose across the curve, and EUR/USD moved lower following the release.
The Congressional Budget Office (CBO) released projections expecting the fiscal 2026 budget deficit to rise to USD 1.853 trillion, or 5.8% of GDP, with the deficit-to-GDP ratio expected to average 6.1% over the next decade. The CBO anticipates economic growth of 2.2% this year, significantly below the Trump administration’s 3-4% growth projections. Rising interest costs remain a key driver of the growing deficit, with public debt expected to reach 120% of GDP by 2036.
The House of Representatives voted 219 to 211 to overturn President Trump’s tariffs on Canadian goods. The vote is largely symbolic, as Trump is unlikely to sign it into law. Trump defended the tariffs, citing their benefits for economic and national security, and warned Republicans against voting against them.
Equities: Global equities edged higher yesterday, but the headline masks a clear regional divergence. Asia and the broader EM complex posted solid gains, extending the pronounced YTD outperformance versus DM. In contrast, the US and parts of Europe failed to meaningfully respond to the strong US labour data, a move we would normally have expected, particularly in cyclicals and financials.
Macro is currently not the dominant driver. Instead, AI disruption fears continue to reshape risk appetite. Investors are reducing exposure to software and perceived “AI losers” while reallocating into old economy segments. Yesterday, this rotation also weighed on wealth managers. In other words, the underperformance of cyclicals was not macro-driven but rather linked to renewed AI-disruption concerns.
In the US yesterday, Dow -0.1%, S&P 500 -0.01%, Nasdaq -0.2% and Russell 2000 -0.4%.
This morning, Asia is again leading. Notably, Japan is not at the forefront; instead, South Korea is surging, up around 3% at the time of writing. US and European futures are higher as well, with EuroStoxx 50 futures up 0.7%.
FI and FX: In the US, the yield curve flattened following the strong US jobs report, with front-end rates rising more than the long end—the 2-year Treasury gained 6bp while the 10-year rose 4bp. In the euro area, there was some intraday spillover from higher US yields, particularly in the front end, but the moves later reversed. EUR/USD dipped back below 1.19 as the USD broadly strengthened in yesterday’s session. A rather uneventful session for the Swedish krona with EUR/SEK closing the session basically unchanged under low volatility. EUR/DKK FX forwards have begun responding to the rise in EUR/DKK spot above 7.4700 this week.
, unemployment rate at 4.3% (DB: 4.4%, cons: 4.4%) and benchmark revisions reducing March 2025 employment by 898k (DB early estimate: -919k). Education and health care drove job gains (+137k), while the public and financial sectors recorded cuts. Despite a higher participation rate, the unemployment rate ticked lower, indicating strong labour demand. UST yields rose across the curve, and EUR/USD moved lower following the release.){kind=link}