Monday Report


US statistics tended towards being disappointing. For example, the ISM Manufacturing Index fell from 64.7 to 60.7 in April, while its Non-Manufacturing counterpart dipped to 62.7. April’s new job numbers were disappointing at 266,000, well short of the expected 1m. Hard to say whether this is down to a labour shortage fuelled by overly generous government stimulus or to weaker economic activity. In any event, hourly earnings rose 0.7% MoM, supporting the labour shortage argument… In the eurozone, retail sales surprised to the upside in March, up 2.7% MoM. Lastly, in China, the Caixin services PMI rose from 54.3 to 56.3 in April, while foreign trade recovered, with exports up 32.3% YoY and imports up 43.1% YoY.


The price of a tonne of CO2 quoted under Europe’s Emissions Trading Scheme (ETS) topped €50 for the first time on 4 May and is up more than 50% in the year to date. Prices are being pushed upwards by the 21 April provisional agreement in the EU on the European Climate Law, the expected reform of the ETS, the fact that over 37% of funding in the European recovery package is set to be invested in sectors aligned with the carbon trajectory… and the presence of more financial investors.


Risk appetite remained high: global equities gained 1.5%, commodities continued to surge (with copper up 6% and oil 1.5%) and, in bonds, credit spreads held steady or eased. The decline in US sovereign yields (with 10-year yields down 5 bps) penalised the dollar (with the dollar index losing 1.1%) and pushed up gold (up 3.7%). To be monitored this week: retail sales, SME confidence (NFIB index), consumer and producer price indices, industrial production and consumer confidence (Univ. of Michigan) in the US; Sentix confidence indicator and industrial production in the eurozone; and consumer and producer price indices and money supply in China.

Swiss Market

This week is set to be a particularly quiet one news-wise, with the results season drawing to a close and the Ascension Day public holiday on Thursday. However, the SNB is due to report the outcome of the latest federal bond issue. The following companies are also due to report Q1 results or sales: Swiss Life, Zurich Insurance and Varia US.


AIRBUS (Satellites) booked orders for 48 aircraft in April, compared with an average of only 13 a month in Q1, and delivered 45 aircraft in the month, compared with a Q1 average of 41 a month. Good news.
FACEBOOK (US Core Holdings) has resumed its peer-to-peer money transfer service in Brazil after it was blocked by the country’s central bank a year ago. Brazil is WhatsApp’s second biggest market, with 120m users. Facebook also intends to try launching these services in Mexico and Indonesia.
MOWI (Core Holdings): two research reports, issued late last week and today, have highlighted a recovery in demand for salmon (lockdown effects + reopening of restaurants), notably in Asia and the US, with supply getting tight and prices rising… This bodes well for sales and profitability over the coming quarters.
SONOVA (Core Holdings) last Friday announced that it is to acquire Sennheiser’s Consumer division for €200m in cash (0.8x EV/sales). The division specialises in consumer headphones and hearing devices (wireless headphones, earbuds) and has an extensive online and physical store network. This acquisition will provide the group with a foothold in the consumer market – a future growth area for the hearing device sector.


US inflation expectations continued to rise, ending the week at a year-to-date high (with the 5-year, 5-year forward inflation expectation at 2.49%). However, US yields ended the week lower, pulled down by weak real interest rates, with 10-year yields down 5 bps at 1.58%. In credit, spreads eased slightly and indices had a good start to the month, with all categories posting gains, led by the US IG segment (up 0.45%). The ramp-up of green bonds in the HY segment intensified, with a total of €10bn issued in the year to date – already three times the full-year totals for 2019 and 2020.

Sentiment of traders

Stock market
Last Friday’s dismal US job numbers caused markets to blow hot and cold. While providing some reassurance as regards inflation and the commitment of central banks, they have raised questions about the strength of the recovery. With the slightest detail likely to tip the scales towards the bulls or the bears, we remain extremely cautious on this week.
After a fruitless attempt to break through support at EUR/USD 1.1980, EUR has rallied strongly against USD, reaching EUR/USD 1.2156 this morning. This trend has been significantly quickened by far lower than expected US job numbers and the fall in US 10-year yields. GBP benefited from USD weakness, with GBP/USD climbing to 1.4060. CHF has firmed up at EUR/CHF 1.0940 and USD/CHF 0.90, while gold strengthened to $1,833/oz. Our ranges – USD/CHF: supp. 0.8960, res. 0.9225; EUR/USD: supp. 1.1980, res. 1.2268; GBP/USD: supp. 1.3822, res. 1.4140.

Today’s graph


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