Monday Report


There were very few US statistics last week: the only one worth commenting on was the June ISM Non-Manufacturing Index, which fell further than expected, down from 64 to an albeit still high 60.1. In the eurozone, the Sentix index of investor confidence continued to recover, up from 28.1 to 29.8 in July, while the ZEW indicator fell from 81.3 to 61.2 in the same month. May retail sales rose in line with expectations (up 4.6% MoM and 9% YoY). Lastly, in China, to counter the slowdown (with the Caixin services PMI falling from 55.1 to 50.3), the PBoC lowered banks’ reserve requirement ratio from 12.5% to 12%.


As part of its strategic review, the ECB has committed itself to incorporating climate change considerations more systematically into its monetary policy, notably in relation to corporate bond purchases. The institution aims to achieve “efficient allocation of resources”, has set up a climate change centre and is planning to expand its analytical capabilities, particularly in relation to macroeconomic modelling, transmission mechanisms and risk assessment.


Fears of fresh pandemic-related restrictions had a bigger impact on emerging and Japanese equities (down 2.6% and 2.9% respectively) than on other developed markets (with the MSCI World up 0.3%) or copper (up 1.4%). As sovereign yields fell and the dollar stabilised (with the dollar index down 0.1%), gold benefited (up 1.4%). To be monitored this week: consumer and producer price indices, Philadelphia Fed and Empire Manufacturing (NY) leading indicators, industrial production, retail sales and consumer confidence (Univ. of Michigan) in the US; industrial production, trade balance and new vehicle registrations in the eurozone; and trade balance, Q2 GDP, retail sales, investment and industrial production in China.

Swiss Market

To be monitored this week: Flughafen Zürich June traffic statistics and FSO June producer and import prices. The following companies are also due to report H1 2021 figures/results: Bossard, Rieter, Barry Callebaut, DKSH, Partners Group (assets under management), Ems-Chemie and Richemont.


3M (added to US Core Holdings) is a conglomerate with a portfolio of over 60,000 products. Its diversified business makes it a low-risk proposition. A new management team was installed in 2018 with the aim of bolstering growth by ramping up R&D and leveraging megatrends.
EPIROC (added to EU Core Holdings) is a leader in underground mining equipment with a track record of operational excellence and high and resilient margins. The assumption of a quickening investment cycle in the mining industry is reflected in an above-consensus growth rate in our valuation model.
SANDVIK (added to EU Core Holdings) is the number two player in underground mining equipment, which means the assumption of a quickening mining investment cycle also applies to it. The company’s other businesses (outside of mining equipment) carry low valuations and thus have “value” overtones.
TELADOC (added to US Satellites – high risk profile): as a pioneer, Teledoc is well placed to benefit from the expansion of telemedicine. While some uncertainty remains as to how quickly the underlying market will expand, the trend is established and long-term potential is significant. The correction in the share price, down 45% since its February high, offers an opportunity to move in.


Yields declined for the second week running amid fears over the delta variant, a slowdown in Chinese credit and more technical factors, including in particular low US Treasury issue volumes. US 10-year yields ended the week down 6 bps at 1.36%, while in Europe, 10-year Bund yields fell 6 bps to -0.29%. In credit, HY spreads widened moderately in Europe (up 5 bps) and the US (up 3 bps). In investment grade, spreads held steady in Europe, though with spreads in the hybrid segment outperforming (down 3 bps).

Sentiment of traders

Stock market
After a jittery week on equity markets and a significant decline in US yields, indices were up at the open this morning. Results season is due to kick off with US banks on Tuesday. On the macro front, this week will bring CPI, PPI, industrial production and retail sales figures. We remain confident.
Last week’s decline in US 10-year yields slowed USD against other major currencies: GBP/USD 1.3890; EUR/USD 1.1870; USD/CHF 0.9145. EUR/USD continues to trade in the range 1.1720-1.1940. CHF benefited from the correction in European equity markets, with EUR/CHF firming up to 1.0858. Breaking through support at 1.0830 would pave the way for the pair to move towards 1.0760. Gold is trading at $1,801/oz.

Today’s graph


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