Monthly Review: Facts, Figures, & More

Monthly Review: Facts, Figures, & More



United States

Focus in the US was balanced between geopolitical and inflationary concerns, as sanctions were imposed by the US on some Russian companies and individuals. The trade barrier and tariff related tension remained and the 10 years US Treasury crossed the 3% yield psychological barrier. Relatively upbeat earnings reports did little to lift the equity market further. US economic growth cooled with GDP growth as well as employment figures which came short of analysts’ expectations.

Euro area

France’s President Macron faced SNCF employees discontent while trying to enact reforms of the state-owned railway company, abolishing privileges such as job for life and generous retirement packages. Moreover, French economic performance was disappointing as GDP numbers came below analysts’ estimates. In Germany, the IFO business climate index fell and expectations deteriorated, a sign that Europe’s leading economy might be slowing down.

United Kingdom

The United Kingdom economy showed mixed data in April. GDP annual growth rate was down to 1.2%, the weakest progression since Q2 2012. Retail sales were also disappointing, confirming a challenging environment for high street retailers, and soft housing and construction numbers. Inflation fell to its lowest level in a year, at 2.5%, the impact of weakening GBP in reaction to the EU referendum beginning to fade, while wages rose more than inflation, which translates into the first real pay growth for British workers since January 2017.


The KOF business situation indicator for the Swiss private economy improved further, reaching its highest point since the summer of 2011, with however the retail trade sector still expressing some concerns about their business situation. The strong economic activity momentum was confirmed by solid employment figures. Thomas Jordan mentioned during the SNB annual meeting the “imbalances on the mortgage and real estate markets” and that “banks are aware of the risks they have assumed and ensure that they remain well capitalized in the future”

Central banks:


Federal Reserve (next meeting: May 2nd)

The Federal Open Market Committee released its minutes from its March meeting, the first under new Chairman Jerome Powell. All participants agreed that the outlook for the economy beyond the current quarter had strengthened in recent months. In addition, all participants expected inflation on a 12-month basis to move up in coming months. Fed officials also see the uncertainties regarding trade policies as a downside risk to the economy.

European Central Bank (next meeting: June 14th)

The ECB unsurprisingly kept its interest rates unchanged in April, and expects them to remain at present levels for an extended period of time. The Central Bank expects solid and broad based economic expansion, the risk to this scenario being related to global factors such as protectionism, that has already damaged business confidence, as Europe economic performance being so dependent on exports. On the other hand, Mario Draghi acknowledged some moderation in growth or some loss in momentum for Eurozone countries since the last meeting.

Bank of England (next meeting: May 10th)

Governor of the Bank of England Mark Carney adopted a softer tone concerning a possible hike at the next BOE meeting in May, commenting on mixed data emanating from the retail sector. Market participants widely expected the Bank’s monetary policy would raise rates to 0.75% from 0.5%. The GDP numbers as well as other economic indicators which were indicating a fragile economy, put another dent on a rate hike scenario.

Swiss National Bank (next meeting: June 21st)

SNB board members continued to qualify the CHF as being subject to a lot of buying pressure. However, interestingly, the CHF, generally considered as a safe haven currency, slipped even though the situation remained tense on the geopolitical front. The EURCHF exchange rate crossed the symbolic level of 1.20 CHF per EUR, a level the SNB defended for many years. This was seen by some commentators as the first step towards the end of negative interest rates in Switzerland.

Market issues:

■ JPMorgan Chase warned clients about early signs of a rare yield-curve inversion in swaps pricing. This might signal the end of an economic cycle or a policy mistake from the Federal Reserve.
■ There was a large number of new issues in major currencies this month. Their performance in the grey market was however subdued.
■ Yields on Armenian Government bonds rose steeply after the Prime minister resigned. Armenia is a former-Soviet nation under Russian influence that is strategically located and shares borders with Azerbaijan, Georgia, Turkey and Iran.
■ Hungary elected Viktor Orban as Prime minister for the third consecutive term, whose program goals are to keep migrants out of the country.

Credit Markets:

■ On April 9, stocks of the aluminum producer Rusal, which represents 7% of the world’s aluminum production, plunged nearly 50% after the US announced sanctions on the company and its owner, the Russian billionaire Oleg Deripaska.
■ The US Justice Department has granted antitrust approval to a $62.5 billion acquisition of Monsanto, the world’s biggest seed company, by German pharmaceutical and pesticide firm Bayer. However, the German company will be forced to sell some of its assets to rival BASF to comply with the DOJ request. Consulting with best asset management companies can be of help.
■ HNA, two weeks after abandoning its plans to list the airline catering company Gategroup, did the same with the planned share sale of Swissport, a ground handling company, citing current market conditions.
■ Netflix posted its strongest subscribers growth, despite having recently raised its prices for its streaming services. The company has now 125 million subscribers worldwide.
■ Caterpillar, the manufacturer of construction, mining and forestry equipment, beat earnings estimates but signalled earnings may have peaked. Market participants often consider Caterpillar performance as a reliable indicator of global economic activity.
■ Lockheed Martin latest F-35 fighter jet operational problems continued to be a drag on the company securities performance. The aircraft continues to be the company largest source of revenues this year.

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