Swedish employment has risen since early 2025. Both BAS and LFS data show a positive trend.<\/p>\n
During the second half of 2025, employment plans improved. At the start of this year, plans eased but stayed positive.<\/p>\n
Forward-looking indicators and higher job vacancies point to stronger labour demand. Employment is expected to grow faster than the labour force.<\/p>\n
Unemployment is expected to fall over the year. Even so, unemployment remains elevated.<\/p>\n
Resource use in the labour market is still below normal. This applies across data sources.<\/p>\n
The article was produced using an artificial intelligence tool and reviewed by an editor.<\/p>\n
Based on the view that the Swedish labor market is strengthening gradually, we see a specific path for monetary policy. The persistent slack, with unemployment still elevated, gives the Riksbank room to maneuver without fearing immediate wage inflation. This environment, where employment is rising but not overheating, points towards a more dovish policy stance in the coming months.<\/p>\n
This outlook reinforces the market’s expectation of a potential Riksbank rate cut later this spring, especially as inflation continues to cool. Recent data shows CPIF inflation tracking at 2.1% in January, just above the central bank’s target, which supports the case for easing policy to bolster the economy. Therefore, positioning in interest rate swaps to profit from a falling policy rate is a prudent strategy for the weeks ahead.<\/p>\n
For currency traders, this suggests continued headwinds for the Swedish Krona. The prospect of the Riksbank cutting rates before the European Central Bank will likely keep pressure on the SEK. We should consider buying EUR\/SEK call options to capitalize on potential further weakness in the krona over the next quarter.<\/p>\n
The equity market, specifically the OMXS30 index, should benefit from this environment of a slowly recovering economy and the prospect of lower borrowing costs. After seeing modest GDP growth of 0.2% in the final quarter of 2025, an interest rate cut could further boost corporate earnings and investor sentiment. Buying call spreads on the OMXS30 offers a risk-defined way to gain upside exposure.<\/p>\n
However, the note of caution about employment plans dampening at the start of the year introduces uncertainty. This suggests that implied volatility in both the currency and equity markets may not fully reflect the potential for a surprise data release or a shift in Riksbank tone. We observed a similar pattern in late 2025, where low volatility preceded a sharp market adjustment, presenting an opportunity for those positioned in options.<\/p>\n
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