Satisfactory US statistics – Bordier’s Monday report

As expected, the unemployment rate in the eurozone was unchanged at 6.6% in June.

Business

The statistics released in the United States have been fairly satisfactory. The ISM manufacturing index fell much less than feared in July (52.8 to 53) and its services counterpart rallied (56.7 to 55.3) despite expectations for a decline. Finally, the job market is much better than expected: by adding 528,000 jobs in July, the economy has regained all the jobs lost during the pandemic and the unemployment rate has fallen from 3.6% to 3.5%. As expected, the unemployment rate in the eurozone was unchanged at 6.6% in June. While PMIs for manufacturing (49.8) and services (51.2) were revised slightly higher, retail sales disappointed in the same month (-1.2% m/m). In China, PMIs fell in July: manufacturing to 49 from 50.2 and services to 53.8 from 54.7.

climate

According to a report by Bloomberg NEF, global investment in renewable energy capacity hit a record $226 billion in the first half of 2022: an 11% increase from the first half of 2021, despite supply difficulties for solar and wind power in particular.

obligations

In the US, the good reading of the ISM for services and the jobs report pointing to another significant increase in hourly wages in July (+0.5%) have reduced recession fears and show that the Fed still has work to do to contain inflation to break. Against this backdrop, US rates ended the week sharply higher (2Y +34bps/10Y +18bps), although the market has yet to revise expectations for a 2023 rate cut. At the credit level, sentiment risk was positive and HY spreads tightened very sharply in the US (-40bp) and Europe (-41bp).

trader sentiment

stock exchange

Between inflation, the risk of recession and full employment, investors no longer know what to do and the markets have developed in a narrow range. This week the US CPI will be released, which will be followed closely, as well as some quarterly results (BioNTech, Porsche, E.ON, RWE, Disney etc.). Indices are facing significant resistance, a drop is likely.

currencies

In a summer market without much momentum, the $ is slightly higher: €/$1.0180 $/CHF 0.9610, helped by US jobs numbers, expected Fed rate hikes and rising geopolitical tensions (Ukraine, Taiwan, Israel etc.). This trend should continue this week, traders will focus on the US CPI. Our ranges €/$0.9950-1.03, €/CHF0.9675-1.0047, $0.9470-0.9886/CHF, £/$1.1890-1.2406. Gold ounce consolidates at $1,775/oz, sup. 1’711, res. 1’878.

markets

Easing fears of a near-term recession pushed 10-year rates sharply higher (USD: ~+20bps; EUR & CHF ~+10bps). Equities reacted more mutedly and in different orders (US: +0.6%; Europe: -0.6% and EM: +0.9%), while credit spreads tightened. Gold (+0.7%) did not suffer from the appreciation of the dollar (dollar index; +0.7%), but the price of oil fell (-13.7%). To be monitored this week: SME Confidence (NFIB Index), Consumer and Producer Price Indices and Household Confidence Index (Univ. of Michigan) in the US; Investor Confidence Index (Sentix) and Eurozone Industrial Production; Foreign exchange reserves, trade balance and consumer price index in China.

Swiss market

To be monitored this week: Unemployment rate and import price index The following companies will publish results: Dufry, BCGE, BC Bern Galenica, Alcon, Tornos, Swissquote, Zürich Versicherung, VZ Holding, EMS Chemie, Straumann.

shares

ACCOR (Satellite): The development of RevPars in July in Europe (+21.5% compared to July 2019), in the UK (+22.5%) and in the USA (+7%) goes in the right direction and confirms the current one Recreation in the hotel sector.

INDITEX (Core Holding): H&M and Zalando commented positively on the development of clothing sales in Europe in July and supported the retail sector last week.

sector PHARMACY: The Senate on Sunday approved the anti-inflation bill bill, including measures to lower drug prices. The project now goes to the side of the House of Representatives for a final vote.

STELLANTIS (Satellite): Europe’s new car registrations improved sequentially in July (+10% vs. -17% in June vs. -14% since Jan. 1), although levels are still low. Note rating upgrades by Fitch on Thursday and Moody’s on Friday for Stellantis, underscoring the group’s financial soundness and favorable outlook.

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