Monday Report


US statistics were mostly satisfactory. The Dallas Fed’s leading indicator climbed higher than expected in April, up from 28.9 to 37.3, as did consumer confidence (up from 109 to 121.7), buoyed by a 21% MoM increase in household income in March (government stimulus cheques). Q1 GDP growth came in at 6.4% QoQ annualised, slightly below expectations, with the GDP deflator rising to 4.1% QoQ annualised. In the eurozone, EC confidence indicators all recovered more strongly than expected in April (economic sentiment: up from 100.9 to 110.3; services: from -9.6 to 2.1; industrial: from 2.1 to 10.7), while GDP contracted less sharply than expected in Q1 (down 0.6% QoQ). Lastly, Chinese manufacturing and services PMIs declined slightly (down from 51.9 to 51.1 and from 56.3 to 54.9 respectively), signalling that China is further ahead in the global cycle.


At the climate summit organised by Joe Biden, the IMF’s Managing Director called on the G20 countries to set an international carbon price floor, though without going into details as to how this would be done. There are currently over 60 different pricing or taxing systems but the average recorded price is around $2 a metric ton, whereas the IMF estimated in 2019 that, to drive emissions lower, the average price would need to rise to $75 a metric ton by 2030.


Strong macroeconomic and microeconomic numbers and confirmation of the Fed’s accommodative policy were not enough to propel equities higher: globally, indices lost 0.2% and 10-year sovereign yields rose a few basis points. Credit spreads narrowed, especially in the high-yield segment, confirming that risk appetite remains high. Gold (down 0.3%) suffered slightly as a result of dollar appreciation (with the dollar index up 0.5%), unlike copper (up 2.6%) and oil (up 1.8%). To be monitored this week: ISM Manufacturing and Non-Manufacturing indices, employment report and consumer credit in the US; PPI and retail sales in the eurozone; and Caixin manufacturing and services PMIs, currency reserves and trade balance in China.

Swiss Market

To be monitored this week: KOF Q2 employment barometer, April PMIs, SECO consumption climate, FSO April inflation, KOF April economic survey, SECO April unemployment, FSO March overnight hotel stays and SNB end April currency reserves. The following companies are also due to report Q1 results: Oerlikon, Adecco, Geberit, SIG Combibloc, AMS, Alcon, Landis+Gyr (2020), Swiss Steel, Sunrise, Valiant and Aluflexpack (sales).


APPLE (US Core Holdings) has posted record sales (up 54% YoY), boosted by its iPhone 12 models (5G). However, the group warned that chip shortages will affect iPad and iMac production. On the regulatory front, the EU has launched an investigation into alleged anti-competitive practices in relation to Apple’s App Store and streaming music service.
EURONEXT (Satellites) will tomorrow launch a capital increase (running until 10 May) to finance its acquisition of Borsa Italiana. We are in favour of this diversifying transaction and recommend subscribing. The group has also released very robust preliminary Q1 results only slightly shy of its excellent Q1 2020 performance.
FACEBOOK, GOOGLE and AMAZON (US Core Holdings) all reported excellent results last week, posting year-on-year top-line growth of 46%, 34% and 44% respectively. Online advertising has recovered very strongly and the transition to online formats will continue to gather pace over 2021-2022. Google heavily dominates the online space, with an end Q1 market share of 57%, followed by Facebook and then Amazon.
KPN (Satellites) has rejected two takeover bids (from EQT/Stonepeak and KKR) amid market speculation over an offer at more than €3 per share. The EQT/Stonepeak bid was rejected with no mention of price; the consortium valued the deal at €18bn (compared with KPN’s market cap of €12bn).


With the US consumer confidence index rising (121.7) and Q1 GDP growth coming in at 6.4%, US yields have begun to rise again, with 10-year yields ending the week 6 bps higher at 1.62%. In Europe, 10-year Bund yields rose for the fifth week running, ending the week back at pre-COVID-19 levels (up 6 bps at -0.20%). In credit, last week was a risk-on week, with high-yield spreads narrowing in the US and Europe (down 4 bps and 1 bp respectively) and high-yield indices gaining 0.21% and 0.19% respectively.

Sentiment of traders

Stock market
After a flood of mostly positive results last week, indices posted year-to-date highs before correcting slightly on Friday. A good number of quarterly results are still expected over the next few days. Meanwhile, on the macro front, we expect trade balance, durable goods orders, PMIs and job numbers in the US. We remain confident.
USD has firmed up, helped by positive US indicators and profit-taking on GBP and EUR: EUR/USD 1.2035; USD/CHF 0.9125; GBP/USD 1.3825. For this trend to last, EUR/USD must break through support at 1.1980. CHF is temporarily benefiting from geopolitical tensions (China, Russia): EUR/CHF 1.0980. Forex dealers will be keeping a close eye on the BoE this Thursday. Gold is stable at $1,779/oz. USD/CHF: supp. 0.9000, res. 0.9225; EUR/CHF: supp. 1.0915, res. 1.1160; GBP/USD: supp. 1.3740, res. 1.40; EUR/USD: supp. 1.1900, res. 1.2207.

Today’s graph


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