Category Archive: 2) Swiss and European Macro

Main Author George Dorgan
George Dorgan
George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on SeekingAlpha.com and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.

Bund yields-Heading further down?

Our central forecast is for Bund yields to rise (feebly) into positive territory by the end of this year, although risks are tilting to the downside.Four main factors have been driving down the 10-year Bund yield, which reached an all-time low of -0.26% on June 7. Considering changing circumstances, we have lowered our year-end target for the 10-year Bund yield from 0.3% to 0.1% and expect it to remain in negative territory until at least October...

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Swiss Producer and Import Price Index in May 2019: -0.8 percent YoY, unchanged MoM

13.06.2019 - The Producer and Import Price Index remained unchanged in May 2019 compared with the previous month. The index stood at 102.2 points (December 2015 = 100). Petroleum products in particular saw higher prices, while chemical and pharmaceutical products became cheaper. Compared with May 2018, the price level of the whole range of domestic and imported products fell by 0.8%.

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How dovish can Swiss monetary policy go?

The Swiss National Bank finds itself having to deal with an uncertain growth and inflation outlook as well as persistent external risks, but it is unlikely to pre-empt the ECB on interest rates.At its meeting on 13 June, the Swiss National Bank (SNB) will face an uncertain growth and inflation outlook. Economic data have been mixed and, more importantly, external risks (intensification of trade disputes, Brexit, Italian budget disagreements…) have...

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Why has euro inflation stayed so low?

Weak inflation data pose a conundrum, both in terms of the growth outlook and the ECB’s policy stance. We believe the ECB will stay on hold in 2020.The euro area headline flash Harmonised Index of Consumer Prices (HICP) dropped to 1.2% year on year in May from 1.7% the previous month.  Core inflation fell by 50bp to 0.8% y-o-y.

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Overnight hotel stays rose by 0.7percent during the 2018/2019 winter season

05.06.2019 - The hotel industry in Switzerland recorded 16.7 million overnight stays during the winter tourist season (November 2018 to April 2019), i.e. the best result since the winter season of 2007/2008. Compared with the same period last year this represents an increase of 0.7% (+117 000). With 8.8 million overnight stays, foreign demand rose by 1.0% (+83 000).

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Swiss Consumer Price Index in May 2019: +0.6 percent YoY, +0.3 percent MoM

03.06.2019 - The consumer price index (CPI) increased by 0.3% in May 2019 compared with the previous month, reaching 102.7 points (December 2015 = 100). Inflation was 0.6% compared with the same month of the previous year. These are the results of the Federal Statistical Office (FSO).

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Swiss Retail Sales, April 2019: -0.1 percent Nominal and -0.7 percent Real

31.05.2019 - Turnover in the retail sector fell by 0.1% in nominal terms in April 2019 compared with the previous year. Seasonally adjusted, nominal turnover rose by 0.4% compared with the previous month. These are provisional findings from the Federal Statistical Office (FSO).

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Avenues worth exploring in strategic asset allocation

The prospect of diminishing returns for classic, and previously highly effective, 60/40 portfolios (60% equities, 40% bonds) is leading to changes in strategic asset allocation. Efforts to improve prospects include identifying macroeconomic regimes to guide investments and refining how diversification is understood.

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Switzerland GDP Q1 2019: +0.6 percent QoQ, +1.7 percent YoY

Switzerland’s GDP rose by 0.6% in the 1st quarter of 2019. Growth was driven primarily by increasing domestic demand. Foreign trade also provided positive impetus. Value added grew in most sectors.

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European elections – a more diverse but still pro-Europe parliament

Voter turnout for European parliament elections surged across the continent, exceeding 50% for the first time in a quarter century and breaking the downward trend of the last four decades. However, differences in turnout across the EU have been substantial and a more fragmented parliament has emerged.Voter turnout was up for the first time ever and at 51%, higher than in any election since 1994. The results delivered a parliament with a...

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Employment Barometer in the Q1 2019: Positive employment situation

In the 1st quarter 2019, total employment (number of jobs) rose by 1.3% in comparison with the same quarter a year earlier (+0.5% with previous quarter). In full-time equivalents, employment in the same period rose by 1.5%. The Swiss economy counted 6700 more vacancies than in the corresponding quarter of the previous year (+9.4%) with the employment outlook indicator showing a downward trend (–0.1%).

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Rising downside risks to euro area growth

While our forecasts remain unchanged for now, external drags on growth prospects for the euro area look set to persist for longer than we had previously expected.A potential improvement in euro area growth in H2 2019 on the back of a revival in the global economy is in jeopardy due to the intensifying trade dispute between the US and China.

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Swiss Labour Force Survey in 1st quarter 2019: 0.8percent increase in number of employed persons; unemployment rate based on ILO definition at 4.9percent

16.05.2019 - The number of employed persons in Switzerland rose by 0.8% between the 1st quarter 2018 and the 1st quarter 2019. During the same period, the unemployment rate as defined by the International Labour Organisation (ILO) declined from 5.2% to 4.9%. The EU's unemployment rate decreased from 7.4% to 6.8%. These are some of the results from the Swiss Labour Force Survey (SLFS).

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Swiss Producer and Import Price Index in April 2019: -0.6 percent YoY, unchanged MoM

The Producer and Import Price Index remained unchanged in April 2019 compared with the previous month. The index stood at 102.2 points (December 2015 = 100). Higher prices were seen in particular for petrol and machinery, while diesel and heating oil became cheaper.

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French tax cuts designed to reboot Macron’s presidency

The French government’s respond to the ‘yellow vest’ protests could provide a meaningful boost to consumer spending, mostly next year.Following a series of townhall meetings with French citizens up and down France, President Emmanuel Macron responded to social unrest with two doses of fiscal easing.

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Switzerland Unemployment in April 2019: Unchanged at 2.4percent, seasonally adjusted unchanged at 2.4percent

Registered Unemployment in April 2019 - According to surveys by the State Secretariat for Economic Affairs (SECO), at the end of April 2019, 107,298 unemployed persons were registered at the regional employment agencies (RAV), 5,043 fewer than in the previous month. The unemployment rate fell from 2.5% in March 2019 to 2.4% in the month under review.

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Swiss Consumer Price Index in April 2019: +0.7 percent YoY, +0.2 percent MoM

03.05.2019 - The consumer price index (CPI) increased by 0.2% in April 2019 compared with the previous month, reaching 102.4 points (December 2015 = 100). Inflation was 0.7% compared with the same month of the previous year. These are the results of the Federal Statistical Office (FSO).

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Is Europe turning Japanese?

European investment opportunities remain, despite financial repression in the region.The European Central Bank (ECB) surprised market watchers with its dovish turn in January, wiping out any prospect of an interest-rate rise this year and revising its growth projections for the euro area downward for 2019.

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Swiss Retail Sales, March 2019: -0.5 percent Nominal and -0.7 percent Real

Turnover in the retail sector fell by 0.5% in nominal terms in March 2019 compared with the previous year. Seasonally adjusted, nominal turnover fell by 0.1% compared with the previous month. These are provisional findings from the Federal Statistical Office (FSO).

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Peripheral bonds after the Spanish election

We remain underweight peripheral euro area bonds in general due to continued political uncertainty, which will feed volatility.On April 28, Spain held its third general election in less than four years. As was expected, the centre-left Socialists (PSOE) emerged the largest party, but it does not have an absolute majority, so negotiations with other parties will be needed.

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