Swedish Labour Force Survey Concludes The Week

In focus today

In Sweden, the Swedish labour force survey (LFS) for November is set to be released. We anticipate the unemployment rate to come in at 7.90% (8.80% seasonally adjusted). Recent indicators, including the Sweden's Public Employment Servies (SPES), has continued to show an improvement of the Swedish labour market. As SPES typically serves as a leading indicator for the LFS, we might see some improvement today. However, it could well be too early for significant changes to appear.

In Germany, we receive the final inflation data for November. While CPI was unchanged at 2.3% y/y there was a large upside surprise in the HICP index which rose to 2.6% y/y. HICP services inflation was the culprit behind the surprise as it rose to 4.2% y/y (prior: 3.6%) and the final print will shed more light on the drivers.

In the UK, October GDP data is released. After a couple of weak prints, job losses becoming more prominent, and inflation edging somewhat lower, the Bank of England looks ready to cut rates again next week.

In Japan, the Bank of Japan (BoJ) releases its extensive quarterly Tankan business survey on Sunday night. This will be scrutinised by the BoJ ahead of its rate decision Friday next week. Business sentiment is strong in Japan, particularly in the service sector, where tourism is contributing to solid demand.

Also, early Monday, China brings the release of the monthly batch of data for retail sales, industrial production, housing and investments. We expect it to show more of the same, i.e. still weak consumer spending, low home sales, further declines in home prices but decent increase in industrial production supported by robust exports. China is a two-speed economy with strong exports and tech development but weak demand in domestic demand.

Economic and market news

What happened yesterday

In the US, the Federal Reserve has unanimously reappointed its 11 regional presidents in a vote held every five years. While this process typically attracts little attention, scrutiny from the Trump administration and debates about central bank independence raised concerns that some terms could have been blocked.

In Norway, Norges Bank Regional Survey showed that the aggregated production index for next quarter (Q1/26) dropped to 0.3, marginally lower than Norges Bank's expected growth in the September MPR. More importantly, capacity utilization fell from 35% to 33% and the indicator for labour shortage dropped from 25% to 22%. Combined with lower inflation and higher unemployment, this points to a lower rate path in the MPR published next week. Lastly, wage growth this year fell from 4.5% to 4.4%, a bit lower than Norges Bank expected in September.

In Sweden, final inflation figures aligned closely with the flash estimate. November CPI was 0.3% y/y and -0.4% m/m, while CPIF came in at 2.3% y/y and -0.2% m/m, slightly above the flash estimate by 0.1 percentage point. Core inflation was 2.4% y/y and -0.6% m/m. The larger-than-usual monthly decline was driven by a sharper drop in recreation and hotels. Goods prices also fell, including clothing and furniture, with clothing declining slightly more than anticipated, likely driven by earlier and more Black Friday sales. Core inflation was 0.4 percentage points below our forecast, with 0.3 percentage points explained by the unexpected dip in recreation, primarily from package holidays.

In Switzerland, The SNB kept the policy rate at 0%, as widely expected, and maintained its stance on FX intervention. Inflation forecasts were lowered due to recent weaker-than-expected inflation, and the SNB signalled continued monitoring and readiness to adjust policy if needed.

In Turkey, the Central Bank of Turkey surprised markets by lowering its key policy rate by 150 bp to 38%.

In geopolitics, Ukraine has presented its revised 20-point framework to the US, with territorial concessions remaining a key hurdle. The US proposed a 'free economic zone' in part of Donbas and potential joint governance of the Zaporizhzhia Nuclear Power Plant. The broader plan includes security guarantees, rebuilding efforts, and maintaining a strong Ukrainian military. While Washington seeks clarity by Christmas, Zelenskiy insists on a referendum for any territorial concessions.

Equities: Equities were generally higher yesterday despite some emerging weakness in the tech sector. The S&P 500 gained 0.2% but equal-weight S&P 500 0.8%, and the Stoxx 600 advanced 0.6%. The tech pullback was driven by a disappointing report from Oracle, which showed slowing revenue growth and a notable increase in spending. Had this occurred three weeks ago, the market reaction would likely have been pronounced. However, yesterday the weakness remained contained within tech. In fact, materials, financials, and industrials extended their post-Fed-meeting gains, rising another 1-2%. So, the rotation was notable. Futures are little changed this morning.

FI and FX: Norges Bank will publish their funding outlook for 2026, whereas the Riksbank is closing in on their second last nominal SGB QT-auction. The SNB left its policy rate unchanged but stands ready to act in foreign exchange markets, at the same time as they try to withstand a negative policy rate. Net movement in US and EUR rates were relatively muted during yesterday's session. EUR/USD continued to edge higher and touched 1.176 yesterday afternoon.

Source: Danske Bank