Monday Report


US statistics were satisfactory overall. Manufacturing and services PMIs both rose in March (from 58.6 to 59 and from 59.8 to 60 respectively), as did regional leading indicators (with the Richmond Fed’s up from 14 to 17 and the Kansas Fed’s up from 24 to 26). Similarly, consumer confidence (Univ. of Michigan) confirmed its recovery, rising from 83 to 84.9 in March. Conversely, durable goods orders were disappointing, falling 1.1% MoM in February, as were some housing sector statistics, mainly as a result of weather conditions. Eurozone manufacturing and services PMIs also surprised to the upside, up from 57.9 to 62.4 and from 45.7 to 48.8 respectively. Consumer confidence also continued to recover, up from -14.8 to -10.8 in March.


China’s National People’s Congress met in mid-March to finalise the country’s 14th five-year plan, with energy transition taking centre stage. The plan targets a 13.5% reduction in the economy’s energy intensity and an 18% reduction in its CO2 intensity over the period 2021-2025. For the first time, it also sets out a target of gross CO2 emissions peaking by 2030 before steadily declining to reach carbon neutrality by 2060.


Equities picked up in the US (up 1.6%) and Europe (up 0.9%) but not in emerging markets (down 2.2%), penalised by Turkey (down 21% in USD), following the sacking of its central bank governor, and by USD appreciation (with the dollar index up 0.9%). Ten-year sovereign yields fell a few basis points and there was little change in credit spreads. Gold lost 0.6% in the week. To be monitored this week: Dallas Fed confidence index, consumer confidence index, vehicle sales, ISM Manufacturing Index and jobs report in the US; EC confidence indicators (consumers, services, etc.) and CPI in the eurozone; and manufacturing and services PMIs in China.

Swiss Market

To be monitored this week: KOF March economic barometer, BAK spring forecasts, SNB Q4 forex market intervention volumes, FSO February retail sales and inflation, and March PMIs. The following companies are also due to report their 2020 results: Schlatter, Peach Property, Pierer Mobility, Orascom DH, Medacta, Poenina and Vaudoise Assurances.


EATON (US Satellites and b-Transition) has acquired Swiss firm Green Motion SA, which specialises in electric vehicle charging systems and associated software.
Over 12 years, SAINT-GOBAIN (Satellites and b-Transition) is to buy 120 MW of the 250 MW output of Invenergy’s Illinois (US) wind farm, thus doubling the share of renewables in its global electricity consumption to nearly 40%.
STRAUMANN (Core Holdings): at a meeting with the company last week, management stressed that business had been robust in Q1. Its guidance of 8-9% organic growth in 2021 looks particularly cautious, given a favourable base effect in Q2, and is likely to be upgraded in the course of the year.
TSMC (Asia Satellites) initially fell on news of Intel’s $20bn plan to expand capacity. The group is planning price rises from Q2 2021; given capacity shortages in the industry, it could hike prices as many as three times before the year is out.
VOLKSWAGEN (Satellites): the group’s CEO has dampened speculation over an IPO for Porsche Auto, saying he does not consider such a move a priority in the short term. At the same time, broker Jefferies upgraded its recommendation on the share to “buy” while Les Echos highlighted the wave of electric battery production facilities unfurling across Europe (VW, CATL, Tesla, ACC, Northvolt, etc.) – a development we had singled out in connection with manufacturers’ ongoing range electrification.


The interest rate market had a quiet spell, with US 10-year yields ending the week down 4.5 bps at 1.676% and, in Europe, 10-year Bund yields falling 5.3 bps to -0.349%. Against this backdrop, in credit, all indices posted gains, with investment-grade indices outperforming in both Europe (up 0.23%, vs. 0.06% for high-yield) and the US (up 0.59% vs. 0.46%). In a very busy primary market, we were buyers of Nordstrom’s 2.3% 2024 USD notes and Pilgrim’s 4.45% 2031 USD sustainability-linked bond (@4.4%).

Sentiment of traders

Stock market
In this shortened trading week, the focus will be in Europe on the sorry public health situation, in the US on Joe Biden, due to present his infrastructure package, and worldwide on US 10-year yields. Investors are once again likely to be caught between concerns about missing out on the rising market and the fear of a crash. In short, it looks set to be another unsettled week.
EUR is under pressure against USD at EUR/USD 1.1787. Breaking through support at 1.1750 would open the way towards 1.1685; otherwise, the pair will return to the range 1.1830-1.20. USD remains in very strong demand against other currencies: USD/CHF 0.9376; GBP/USD 1.3780; USD/JPY 109.50. We expect EUR/CHF to trade in the range 1.10-1.1150 this week. Gold has consolidated at around $1,727/oz. USD/CHF: supp. 0.9250, res. 0.9470; GBP/USD: supp. 1.3580, res. 1.3850; USD/JPY: supp. 108.30, res. 110.

Today’s graph


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