Monday Report


US statistics were fairly encouraging. SME confidence (NFIB index) continued to recover, rising from 95.8 to 98.2 in March, as did consumer confidence (Univ. of Michigan), up from 84.9 to 86.5 in April, and the Empire Manufacturing confidence index (NYC), which rallied from 17.4 to 26.3 in April. Retail sales surprised to the upside, up 9.8% MoM in March, while industrial production came in short of expectations (up 1.4% MoM). Lastly, consumer prices rose slightly more quickly than expected (up 0.6% MoM; up 2.6% YoY). In the eurozone, retail sales beat expectations in February (up 3% MoM; down 2.9% YoY), as did industrial production, which fell less sharply than expected (down 1% MoM). In China, Q1 GDP bounced back 18.3% year on year but only 0.6% quarter on quarter (disappointing).


Two days of talks between US Special Presidential Envoy for Climate John Kerry and his Chinese counterpart Xie Zhenhua culminated in a major announcement: the US and China – the world’s no. 2 and no. 1 generators of CO2 emissions respectively (> 40% of total emissions) – “committed to cooperating with each other and with other countries to tackle the climate crisis […] with the seriousness and urgency that it demands”. We feel this is a necessary condition to accelerate the transition.


Risk appetite remained high, with equities gaining 1.4% (MSCI World and MSCI Emerging Markets), copper 3.3% and oil 6.1%. Somewhat surprisingly considering economic fundamentals, 10-year sovereign yields fell 10 bps in the US (while picking up slightly in EUR), causing credit spreads to widen slightly and pushing down the dollar (with the dollar index down 0.7%). Gold benefited (up 2.1%), as did local currency emerging debt (down 28 bps). To be monitored this week: Chicago and Kansas Fed confidence indicators and manufacturing and services PMIs in the US; and ECB meeting, consumer confidence, and manufacturing and services PMIs in the eurozone.

Swiss Market

To be monitored this week: FSO 2020 labour market statistics and FCA March/Q1 foreign trade/watch exports. The following companies are due to report Q1 figures: Sika, Zur Rose, Temenos, GAM, Phoenix Mecano, Roche, Romande Energie, Barry Callebaut, Credit Suisse, Idorsia, Inficon, Nestlé, LafargeHolcim, Schindler and BB Biotech.


ALSTOM (Satellites and b-Transition) has won a €2.7bn contract with Danish operator DSB to supply 100 electric train sets for delivery between 2024 and 2030 and made progress in talks over the “Grand Paris” contract originally negotiated by Bombardier Transport. Good news.
SAINT-GOBAIN (Satellites and b-Transition): as part of a shake-up of its asset portfolio, the group is selling off its Chinese pipe business (11,000 employees, sales of €170m and EBIT of only €9m). Makes sense.
TSMC (Asia Satellites) has reported Q1 2021 results showing sales up 25% YoY, buoyed by strong growth in the cloud segment. The group has also announced that the chip market will remain tight over 2021-2022 but shortages in the automotive sector should be resolved by end Q3 2021.
VOLKSWAGEN & STELLANTIS (Satellites): European electric vehicle registrations once again surged in March and Q1 2021 (BEVs: +164%/+81%, with a market share of 6.7%; PHEVs: x4/+185%, with a market share of 7.4%). This trend is set to continue over the coming months thanks to incentives and infrastructure rollout.


Despite strong growth in retail sales (up 9.8% MoM in March) and inflation slightly ahead of the consensus (at 2.6% vs. 2.5%), US yields continued to fall, with 10-year yields ending the week 10 bps lower at a one-month low of 1.58%. Conversely, European yields ended the week higher, with 10-year Bund yields up 4 bps at -0.26%. In credit, US spreads widened slightly (up 2 bps in HY) and the IG segment rallied on falling yields (up 0.53%). In Europe, HY spreads narrowed 6 bps and the class posted a 0.2% gain.

Sentiment of traders

Stock market
With markets awash with liquidity, indices maintained their momentum, continuing to break records. Strong results from US banks also helped markets. This will be a busy week, with results due from Coca-Cola, IBM, Procter, Philip Morris and others. On the macro front this week: leading indicators, home sales and PMIs in the US and an ECB meeting this Thursday. We remain positive.
Falling US 10-year yields continued to hamper USD: EUR/USD 1.1980; USD/CHF 0.9197; GBP/USD 1.3840. Breaking through resistance at 1.20 would give the EUR/USD uptrend a big boost, failing which it will return to around 1.1880/1.1800. GBP is benefiting from the positive effect of mass vaccination and lockdown easing. Geopolitical tensions between Russia and Ukraine are supporting CHF (EUR/CHF 1.1020) and have pushed gold upwards ($1,778/oz). Our ranges – EUR/USD: supp. 1.1880, res. 1.2060; USD/CHF: supp. 0.9150, res. 0.9436; GBP/USD: supp. 1.3640, res. 1.40.

Today’s graph


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