Monday Report


US statistics once again surprised to the upside. The ISM Manufacturing Index fell less sharply than expected in October (from 61.1 to 60.8), while its non-manufacturing counterpart climbed higher than expected (from 61.9 to 66.7). The jobs report delivered a reassuring message: as well as previous months’ figures being revised (+235,000), more new jobs than expected were added in October (531,000). Hourly wages continued to rise (up 0.4% MoM and 4.9% YoY). In the eurozone, retail sales were revised upwards for August, more than making up for the decline in September (down 0.3% MoM; up 2.5% YoY). Lastly, in China, the Caixin PMIs both rose (manufacturing: up from 50 to 50.6; services: up from 53.4 to 53.8), confirming a stabilisation in economic activity after the sharp slowdown.


According to International Energy Agency Executive Director Fatih Birol, if all commitments given before and during COP26 were honoured, it might be possible to limit global warming to 1.8°C. However, according to a survey of authors of the last IPCC report, the findings of which were published in Nature, 25% of respondents think warming by 2100 will be 2°C or less while 75% think it will be higher, with 60% predicting at least 3°C of warming.


The BoE struck a more accommodative than expected tone, triggering an across-the-board fall in 10-year sovereign yields (US: -10 bps; UK/CHF/EU: c. -19 bps). Strong economic numbers pushed equities upwards (with the MSCI World up 1.8%). Commodities declined slightly (with copper down 0.6% and oil 1.7%). Gold (up 1.9%) benefited from the decline in yields and was not penalised by the rising dollar (with the dollar index up 0.2%). To be monitored this week: SME confidence (NFIB index), consumer confidence (Univ. of Michigan) and consumer and producer price indices in the US; ZEW and Sentix confidence indicators and industrial production in the eurozone; and money supply, new lending and consumer and producer price indices in China.

Swiss Market

To be monitored this week: SECO October unemployment and FSO October producer and import prices. The following companies are due to report Q3 sales or results: Montana Aerospace, PSP Swiss Property, Swiss Life, Alcon, Barry Callebaut, Swiss Steel, Züblin, Flughafen Zürich (October statistics), Zurich Insurance, LM Group and Richemont.


AXA (Satellites) reported strong results last week, with volumes and technical indicators exceeding expectations. Reassuringly, management also reiterated its guidance of €1.2bn of profit for AXA XL. The main positive surprise, though, was the announcement of a share buyback totalling €2.2bn.
MOWI (Core Holdings) is due to report its detailed Q3 2021 results this Wednesday. The company’s trading update issued on 18 October clarified that EBIT had been robust but slowed by extraordinary mortality in Canada and that harvest volumes were 6% higher than expected. Trends in Q4 should confirm a normalisation of salmon consumption, with supply increasing and prices rising, pointing to a better FY 2021.
SONOVA (Core Holdings): according to an article in the Sunday edition of the NZZ newspaper, problems linked to cochlear implants (voluntarily withdrawn from the market in February 2020) are more significant than anticipated. At end FY 2021, the company had set aside provisions for product liability totalling CHF 112m. Sonova is due to report its interim results on 15 November, at which time it will probably issue an update on these risks.
VW (Satellites): it was reported in the press over the weekend that the Porsche and Piech families continue to support group CEO Herbert Diess despite any friction with trade union representatives his comments about jobs at VW in Germany (30,000 jobs at risk) might have triggered.


The market digested the Fed’s announcement that it would be tapering its asset purchases by $15bn a month and the Bank of England’s decision not to raise interest rates despite its hawkish tone over recent weeks. Against this backdrop, volatility was high, with yields falling sharply in both the US (10Y: -10 bps) and Europe, where German and Italian 10-year yields ended the week down 15 bps and 25 bps respectively. It was a good week for credit, with strong performance in both Europe (IG: +1.06%; HY: +0.39%) and the US (IG: +0.82%; HY: +0.62%).

Sentiment of traders

Stock market
US job creation propelled indices sky-high. The passing of Biden’s infrastructure plan is also good news. We will be keeping an eye on US inflation figures and, in the eurozone, the ZEW indicator and industrial production. Henkel, PayPal, Porsche and Allianz are due report their quarterly results. We remain positive.

While FX dealers had been expecting the BoE to raise interest rates last Thursday, it instead maintained the status quo. As a result, GBP has plummeted from GBP/USD 1.3650 to 1.3460 today; next key support: 1.34. Following the Fed meeting, USD has consolidated against EUR and CHF: EUR/USD 1.1550; USD/CHF 0.9147. Gold has risen to $1,816/oz. Our ranges – EUR/CHF: 1.05-1.07; EUR/USD: 1.1490-1.17; USD/CHF: 0.9020-0.9230.

Today’s graph


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