Friday's employment figure is yet another clear example of how positive statistics give a negative market reaction – a theme that has been common in recent years.
Interest rate cut expected first in October
In the pricing of the interest rate market, the employment figure has erased the likelihood of an interest rate cut by the US central bank Federal Reserve (Fed) during the spring. Now it points to the next cut being delayed until October. Previously, it leaned towards May or June.
The statistics show that 256,000 new jobs were created outside the agricultural sector in the US in December. This is the strongest employment figure from the US in nine months and can be compared to 212,000 new jobs in November according to revised figures.
Unemployment fell to 4.1, compared to 4.2 percent in November. And hourly wages rose by an average of 0.3 percent compared to the previous month, in line with expectations.
Economists had on average expected a decline to 165,000 new jobs and an unchanged unemployment rate of 4.2 percent, according to Bloomberg's compilation of forecasts.
The markets are reacting strongly to the statistics. The Stockholm stock exchange is being pushed down to minus 0.6 percent and the dollar is surging in value, to 11.21 kronor from 11.15 before the figures.
The Wall Street stock exchange is also being pushed down in futures trading. And already unusually high long-term market interest rates are rising across the board in the US – where mortgage rates have risen from just over 6 to almost 7 percent in a few months.
Swedish interest rates are following upwards
Besides pushing up American mortgage rates, higher long-term market interest rates in the US are affecting the financing costs for American banks and other companies. This also makes fiscal policy stimuli more expensive to finance.
Swedish ten-year government bond yields are following upwards to 2.49 percent, the highest level since May last year.
Higher long-term market interest rates have already created an upward pressure on the interest rate on Swedish mortgages with long binding periods.
