OAT: Block trade

• MNI: GERMANY FEB IFO BUSINESS CLIMATE INDEX 85.2

Swiss employment (excl. agriculture) rose +0.9% Y/Y and +0.1% Q/Q in Q4 2024. The slight sequential increase was based on employment rising both in the tertiary sector, as well as in industry and construction, by 0.1%.

• While the data suggests some labour market softening on the demand side, the figures overall underpin the narrative that the Swiss economy remains on a solid enough footing, meaning little requirement for the SNB to move policy into accommodative territory from a business cycle perspective.
• "Enterprises reported 17.1% fewer vacancies than a year earlier. Difficulties recruiting personnel have declined slightly. In addition, the employment outlook remained positive despite enterprises' cautious estimates", the Swiss statistics agency adds.
• Considering Q4's season- and sports event-adjusted real GDP growth of 0.4%, the sequential employment figures suggest rising productivity last quarter in Switzerland.

Initial headlines from Wunsch appear broadly in line with his rhetoric to the FT this morning.

• "*ECB's Wunsch: May Have to Lower Key Rate to Level That Stimulates Economy" DJ
• "*ECB's Wunsch: Might Have to Be 'A Bit Supportive' if Economic Weakness Persists" DJ
• "*ECB's Wunsch: Key Rate May No Longer Be Restrictive After Cut to 2.5%" DJ

Relevant excerpts from the FT article:

• "Wunsch pointed to mounting uncertainty over the appropriate level of interest rates, stressing that he was "not even sure" if rates were still at a level that was restricting growth and inflation".
• "Wunsch said he felt "relatively comfortable" with the market expectation of 2 per cent rates by the end of the year "give or take 50 basis points". He also said it was "even possible that we will go below 2 per cent" by then, depending on the wider economic environment, external shocks and price pressure".