Sunset Market Commentary

Markets

The absence of both US investors (President’s Day) and important eco data set the stage for a quiet start to the trading week. In the second (or even third) tier data category we found January wage tracker data from Indeed Hiring Lab. The data measure growth in wages advertised in job postings for selected country. The euro area series is an employment-weighted average of the five largest nations and Ireland. Data showed wage growth slowing from 2.43% Y/Y to 2.29% which equals the 3m moving average of 2.3% (stable from 2.28% in December; slowest pace since November 2021). On Friday, the ECB publishes more closely-watched quarterly negotiated wage data (Q4). One-off payments pulled the series from 4% Y/Y in Q2 to 1.9% Y/Y in Q3 with markets expecting a rebound to 2.9% Y/Y in Q4 2025. The central bank’s latest forward looking wage tracker, released last week, points to 2.1% wage growth in the first half of this year and 2.7% growth in H2. It still sees forward-looking information in line with negotiated wage growth that might level off at below 3% by the end of 2026. If realized, these kind of wage growth levels support the case for the ECB to hold the policy rate near a 2% neutral level. Wage growth figures for the UK showed a stabilization around 4.14% Y/Y in January with the 3m moving average extending its slide (since July 2024!) from 4.47% to 4.24%, matching the lowest level since March 2022. UK markets are unnerved as they also eye the bigger releases later this week. The labour market report opens the debates tomorrow with weekly earnings (excl) bonuses expect to mirror today’s numbers with a decrease to 4.2% which would be the lowest since January 2022. Any signs of disappointing job growth would be taken as confirmation that the Bank of England could implement its next rate cut as soon as in March. BoE governor Bailey, the decisive vote of late, saw scope for some further easing of policy. He’s growing more confident on the overall path of wage disinflation while also stressing on several occasions the difference between soft comments (on the labour market) coming from business contacts and actual data still pointing a somewhat less worrying picture. On Wednesday and on Friday, CPI inflation and retail sales round up this week’s UK numbers. EUR/GBP 0.8750 resistance is the one to watch if markets find more evidence to lift near term rate cut bets.

News & Views

The Swiss economy bounced back from the 0.5% decline registered in 2025Q3 with a 0.2% recovery (flash estimate). The expansion was less than the 0.3% expected though. Annual growth last year amounted to 1.4%, quickening from 2024’s 1.2% but well below average economic growth of 1.8% (since 1981), the State Secretariat for Economic Affairs said. Services sector growth from a quarterly perspective was muted and the industrial sector stagnated. In annual terms, however, services grew at an above-average rate, while the “challenging international environment” slowed the export-oriented industry. Growth numbers today came after last week’s sub-par (m/m) inflation readings but are unlikely to sway the central bank into more rate cuts short-term. With a 0% policy rate, the bar for the Swiss National Bank to go back into negative territory is high. The Swiss franc underperforms vs most peers today but remains strong from a long-term point of view. EUR/CHF is filling bids in the 0.913 area.

It happened all in silence, but the topic on joining the euro area is gaining traction in Sweden. Its finance minister Svantesson announced her backing for an inquiry into the pros and cons last month, at the request of the Liberal party. It would be another major U-turn, along with NATO accession in 2022 and testament to how the changing (geopolitical) world order is both ripping up and strengthening existing ties as well as forging new ones. Swedish voters back in 2003 rejected the common currency in a referendum and Svantesson suggested that any plans for euro adoption would again be put to a public vote. That poses significant hurdles for short-term accession with still nearly a majority of Swedes against and about one third in favor. That gap is nevertheless much smaller than a decade ago, when three in four Swedes opposed the euro. There is also some tough political opposition to overcome with the Greens, the Left and far-right all against. While the debate may grow, it is expected that the actual evaluation for euro accession (based on the inquiry) won’t start until after the September elections.