Insights 
VT 
Colombia’s national unemployment rate in September was recorded at 8.2%, surpassing expectations of 8.5%. This outcome suggests an improvement in the labour market, indicating possible stabilisation in employment conditions in the country.
Economic observers will be paying attention to further changes in Colombia’s economic situation and labour market figures. These developments could affect market sentiments and future investment approaches.
Colombias Economic Resilience
With Colombia’s national jobless rate for September coming in at 8.2%, below the 8.5% we expected, we see this as a sign of a surprisingly resilient economy. This unexpected strength in the labor market suggests the central bank may have less reason to consider cutting interest rates in the near future. Therefore, we should reassess our positions that were based on a slowing economy.
This strong employment data, coupled with recent inflation figures that have remained stubbornly above the central bank’s target at 4.1%, makes a case for the Banco de la República to maintain its hawkish stance. The bank held its key interest rate at 6.5% just last week, and this new data will only reinforce that decision. We should anticipate that derivatives pricing in rate cuts for the first quarter of 2026 will need to be adjusted.
For our currency positions, this development is bullish for the Colombian Peso (COP). A tighter labor market and steady interest rates make the COP more attractive, potentially pushing the USD/COP pair below the 4,000 level it has been testing. We can look at buying call options on the COP to capitalize on this potential appreciation against the dollar.
Implications for Colombian Equities
This economic strength should also be positive for Colombian equities, particularly in the financial and consumer sectors. The MSCI Colcap Index, which has seen modest gains of 3% over the last quarter, could see a renewed rally on the back of this news. Buying futures or call options on the index is a direct way to position for this potential upside in the coming weeks.
We remember how quickly central banks pivoted during the 2022-2023 period when strong labor data persisted even as inflation was a concern. While the situation is different now, that historical precedent shows that markets can underestimate the resolve of a central bank when faced with a tight job market. This suggests the risk is now tilted towards higher-for-longer rates more than we previously thought.
