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Daily Macroeconomic Digest

jeudi 04 juin
The ECB has increased the PEPP and extended its duration

US: Initial jobless claims (May 30): 1877k vs 1833k expected (prior: 2126k revised from 2123k)

  • Continuing claims: 21478 k after 20838 k past week.
  • Trend is slowing down, but at moderate pace.


US: Nonfarm productivity (Q1-20): -0.9% q/q vs -2.7% expected (prior: 1.2%)

  • Unit labor costs: 5.1% q/q after 4.8% q/q in initial estimates (2.2% q/q in Q4).
  • Productivity on Q1 was finally less negative than in the first estimate as hours worked were revised significantly downward.


ECB has still surprised by increasing PEPP more than expected

  • The new PEPP program has been increased by EUR 600 bn to EUR 1.35 tr, more than expected and the program should remain in place until mid-2021 versus original end 2020; reinvestment should continue until end of 2022.
  • Views on the Eurozone economy are more pessimistic than the consensus, pointing towards deep 2020 recession (-8.7% vs 7.6 % from consensus) and probably more bumpy and uncertain recovery process even if a rebound is expected from Q3 and in 2021 (5% y/y, close to consensus expectation). Inflation forecasts also remained low (0.3% y/y in 2020; 0.8% y/y in 2021 and 1.3% in 2022), meaning that inflation should remain significant below the 2% target during life of the PEPP.
  • The PEPP is seen as more flexible than the other monetary tools: if no high yield bonds are included (not discussed today), the funds is once again said to be highly flexible (time, asset class and country), so that the door remained opened to include wider range of assets.
  • The increase in the size of the PEPP (EUR 600 bn consensual) was determined clearly to buy time, and to wait for mid-2021 to have more clarity on the economy and markets situation; if purchases increase further or stay at May high speed, it could be possible to see another increase of the fund.
  • The ECB mentioned that the PEPP should act where it is needed in terms of markets tensions or problems in monetary transmission; recent purchases looked relatively conservative and close to PSPP capital rules, except a more marked preference for Italy versus German bonds, but nothing breaching significantly past volatility around monthly purchases.
  • The ECB is clearly not including high yield bonds, bank assets and direct lending to firms and SMEs as next targets to develop, unless markets and economic conditions worsen more from current levels.
  • The ECB answer to the German Constitutional Court is that it is role to German Government/Parliament to answer directly and ECB is under European Court of justice and should stay fully independent; this is clearly some backstop to the first wide initial reactions to German Court decisions and put the pressure more on the political side than the financial side.
  • The ECB seems to secure large refinancing possibilities as the formal political approval of the new Recovery Fund could take a longer time the EU Commission thinks; so, the ECB is ready to face tough times and secure long refinancing means to backstop economies and markets.


Eurozone: Retail sales (April): -11.7% m/m vs -15% expected (prior: -11.1% revised from -11.2%)

  • All major sectors except online sales were heavily down over the month due to the lockdown in place.


Switzerland: CPI (May): 0% m/m vs 0.1% expected (prior: -0.4%)

  • Energy prices have fallen further (-2.5% m/m), while food, tobacco-alcohol and clothes saw their prices on the rise over the month.
  • Core inflation was up by 0.1% m/m after -0.3% m/m he prior month.
  • Yearly trend has declined further, from -1.1% y/y the prior month to -1.3% y/y,and core inflation from -0.4% y/y to -0.6% y/y.


Sweden: Industrial production (April): -15.9% m/m (prior: -1.1%)

  • Industrial orders were also down by 13.9% m/m after -9.5% m/m the prior month.
  • Separately, activity has fallen by 3.1% m/m in the service sector over the month.


mercredi 03 juin
Rebounding business sentiment in services

US: ADP Employment change (May): -2760k vs -9000k expected (prior: -19557k revised from -20236k)

  • Jobs destruction remained in place but at a less negative pace than expected; largest falls were seen in large firms and in the trade and transport sectors.
  • Job destructions were less important than feared, ahead of next Friday non-farm payrolls (-8000 k expected after -20537 k the prior month).


US: Markit Services PMI (May): 37.5 vs 37.3 expected (prior: 26.7)

  • Demand remained globally low, but sentiment has regained from depressed levels on modest return to work for some segments, lower declines in orders and first signals of recovery in demand.


US: ISM Non manufacturing (May): 45.4 vs 44.4 expected (prior: 41.8)

  • Sentiment has improved, driven by business activity, new orders, new export orders; sentiment on employment has just marginally increased from past month.


US: Factory orders (April): -13% m/m vs -13.4% expected (prior: -11% revised from -10.3%)

  • Final data confirmed the large fall of orders in defense and transport sectors over the month.
  • Orders for capital goods non-defense ex aircraft were down by 6.1% m/m after -1.3% m/m, a slight downward revision to first estimate (-5.8% m/m).
  • Total shipments were down by 13.5% m/m and inventories down by 0.4% m/m.


Eurozone: PMI Services (May): 30.5 vs 28.7 expected (prior: 12)

  • Sentiment has strongly rebounded in all major countries from highly depressed levels the prior month.
  • Sentiment has improved on future conditions, while producers were preparing to resume partly activity, but orders and activity remained under constraints in May.
  • Another positive step should be seen in June with the progressive end of the lockdown. Nevertheless, the index is still far below the 50 level, pointing to a still contracting activity.


Eurozone: PPI (April): -2% m/m vs -1.8% expected (prior: -1.5%)

  • PPIs have declined further, from -2.8% y/y the prior month to -4.5% y/y.
  • The fall was driven by energy prices (-7.5% m/m), while prices in other sectors were in a -0.3%/+0.2% m/m range.


Eurozone: Unemployment rate (April): 7.3% vs 8.2% expected (prior: 7.1% revised from 7.4%)

  • Despite some significant rise in the unemployment rate (France, Germany, Spain for instance), the aggregate data at the eurozone have shown only limited rise over the month; the unemployment schemes in place in several countries could explain this factor, but risk of continuing rising trend exists even in the first time of the recovery.


Germany: Unemployment rate (May): 6.3% vs 6.2% expected (prior: 5.8%)

  • Unemployed has strongly increased over the past two months (238 k after 372 k the prior month).


Italy: Unemployment rate (April): 6.3% vs 9.3% expected (prior: 8% revised from 8.4%)

  • Employed has decreased by 274 k after -124 k the prior month, but job seekers have decreased more (-484 k over the month), leading to a surprising fall in the unemployment ratio.


Switzerland: GDP (Q1-20): -2.6% q/q vs -2.1% expected (prior: 0.3%)

  • A sharp fall in all major sectors, except public consumption up by 0.7% q/q; consumption was down by 3.5% q/q and investment in equipment by 4.4% q/q. Exports and imports have both globally declined in parallel, but net trade contribution remained positive; exports of goods ex valuables stayed positive, up by 3.4% q/q.


UK: PMI Services (May): 29 vs 28 expected (prior: 12.3)

  • Sentiment has rebounded but demand remained under constraint.


Brazil: Industrial production (April): -18.8% m/m vs -28.3% expected (prior: -9% revised from -9.1%)

  • A sharp monthly decline, but less negative than feared; all sectors have seen activity falling over the month; the largest fall was in production of consumer durable goods down by 79.6% m/m.
  • Production was down by 27% y/y after -3.8% y/y the prior month.


Turkey: CPI (May): 1.36% m/m vs 0.83% expected (prior: 0.85%)

  • A surprising large rebound in monthly prices of clothes, transport and furniture; the yearly trend has also gained further from 10.9% y/y the prior month to 11.4% y/y. Core inflation was by 10.32% y/y after 9.93% y/y the prior month.


mardi 02 juin
UK: falling house prices under lockdown

UK: Nationwide house prices (May): -1.7% m/m vs -1% expected (prior: 0.9% revised from 0.7%)

  • Lockdown put the housing market under freeze and led to a sharp monthly fall in prices. The yearly trend has also moderated in parallel, from 3.7% y/y the prior month to 1.8% y/y.
  • With the end of the lockdown, activity and prices should progressively regain in the property market.


UK: M4 (April): 9.5% y/y (prior: 8.2% revised from 8.1%)

  • Monthly rise has slowed down, but yearly trend continued to rise for both monetary aggregates and lending (7.4% y/y after 7.2% y/y).


Switzerland: PMI Manufacturing (May): 42.1 vs 42 expected (prior: 40.7)

  • Business sentiment has rebounded, more than expected from low level in the prior month. Sentiment has improved on production, orders and employment from depressed levels.
  • The PMI index was more constructive than the latest KOF index, which has fallen further in May.


vendredi 29 mai
US: fragile rebound in consumer confidence; public transfer refueled household incomes

US: Personal income (April): 10.5% m/m vs -5.9% expected (prior: -2.2% revised from -2%)

  • While compensation and wages were down by 8% m/m, the income was up by 10% m/m and the disposable income up by 12% m/m, thanks to government transfer and wage support scheme.
  • Besides falling labor wages, public transfers were a strong support in income, reducing the negative impact of rising unemployment.


US: Personal spending (April): -13.6% m/m vs -12.8% expected (prior: -6.9% revised from -7.5%)

  • With lockdown in place, purchases were heavily down in goods (-16.5% m/m) and in services (-12.2% m/m) over the month.
  • As disposable income has increased, the saving ratio has exploded from 12.7% to 33%.


US: Core PCE (April): -0.4% m/m vs -0.3% expected (prior: -0.1%)

  • Core inflation has significantly declined over the month and yearly trend has also declined from 1.7% y/y the prior month to 1% y/y.


US: Wholesale inventories (April): 0.4% m/m vs -0.7% expected (prior: -1% revised from -0.8%)

  • Excluding autos, inventories were down by 1.1% m/m.
  • Separately, inventories in the retail sector were down by 3.6% m/m in April.


US: Chicago PMI (May): 32.3 vs 40 expected (prior: 35.4)

  • Contrary to expectations, and to other business surveys, confidence has fallen again in this region dominated by the auto sector on falling production, orders and employment.


US: Consumer confidence (Michigan) (May): 72.3 vs 74 expected (prior: 71.8)

  • Sentiment has improved from the prior month but a bit less than expected and seen in the first estimate (73.7).
  • From past month, sentiment on current conditions has increased (less than in first estimate), while expectations have continued to fall (more than in the first estimate).
  • Opinions were less depressed on current income, but were more negative on business expectations and worried about unemployment.
  • Willingness to buy items has slightly regained from April but remained below March levels.
  • Inflation expectations have increased: from 2.1% y/y to 3.2% y/y at 1-yera, and from 2.5% y/y to 2.7% y/y at 5-10y.
  • Confidence has improved but remained fragile.


Eurozone: CPI estimate (May): 0.1% y/y as expected (prior: 0.4%)

  • Prices are expected to decline by 0.1% m/m on this flash estimate, still driven by lower energy prices (-1.7% m/m).
  • Core inflation is supposed to stay on a stable trend (0.9% y/y) versus lower expectations (0.8% y/y).


Eurozone: M3 (April): 8.3% y/y vs 8.2% expected (prior: 7.5%)

  • M1 growth has accelerated further from 10.4% y/y to 11.9% y/y; all monetary aggregates have shown accelerating trend, except short-term deposits.
  • Credit to the private sector has gained further, from 4.2% y/y the prior month to 4.4% y/y.


France: CPI (May): 0% m/m as expected (prior: 0%)

  • Frist estimate has pointed towards flat monthly change but still further decline in the yearly trend, from 0.4%y/y the prior month to 0.2%y/y.
  • During the month, energy prices have fallen further (-2% m/m), but food prices were up by 1.8%m/m, according to this first estimate.


France: Consumer spending (April): -20.2% m/m vs -14.7% expected (prior: -16.9% revised from -17.9%)

  • With the lockdown and good weather conditions, all sales including energy have sharply fallen for the second month. The yearly trend has further deteriorated (from -17% y/y to -34% y/y).
  • May sales should remain negative, while some relief should be seen in June data.


France: GDP (Q1-20): -5.3% q/q vs -5.8% expected (prior: -0.1%)

  • Final estimate for Q1 was slightly less negative than the first one (-5.8% q/q), thanks to less negative contribution from services (revised with more accurate data). Nevertheless, domestic demand has sharply fallen (consumption down by 5.6% q/q; private investment down by 10.5 %q/q) and net export contribution was flat due to weak exports in parallel with falling imports.
  • Moe negative figures expected for Q2-20.


France: Producer Prices (April): -2.9% m/m (prior: -1.7%)

  • Prices have declined by 4.7%y/y after -2.7% y/y the prior month, still driven by lower energy prices.


Germany: Retail sales (April): -5.3% m/m vs -12% expected (prior: -4% revised from -5.6%)

  • Sales have sharply declined in all sectors due to the lockdown period, as seen in other countries.


Italy: GDP (Q1-20): -5.3% q/q vs -4.7% expected (prior: -0.2%)

  • Downwards revisions on the Q1 GDP fall.
  • All major sectors including net exports were down in Q1, and more negative data are expected for Q2.


Switzerland: KOF (May): 53.2 vs 70 expected (prior: 59.7 revised from 63.5)

  • Business sentiment has further declined after downwards revisions to prior month data.
  • Sentiment has passed below the levels seen in 2008 (index at 60).


Brazil: GDP (Q1-20): -1.5% q/q as expected (prior: 0.5%)

  • While consumption has decreased by 2% q/q, investment was still up by 3% q/q and government spending stayed moderately positive (0.2% q/q).
  • GDP was down by 0.3% y/y in Q1 after 1.7% y/y in Q4-19.


Turkey: GDP (Q1-20): 0.6% q/q vs 0.4% expected (prior: 1.9%)

  • Activity has slowed down over the quarter, but it remained positive in all sectors, except exports; consumption stayed firmed (2.9% q/q) and government expenditure was stronger (11% q/q after 0.4% q/q in Q4-19).
  • GDP growth was up by 4.5% y/y after 6% y/y in Q4-19.
jeudi 28 mai
US: sharp fall in durable goods and pending home sales; Eurozone industrial confidence slightly less negative

US: Durable goods orders (April): -17.2% m/m vs -19% expected (prior: -16.6% revised from -14.7%)

  • Orders have sharply fallen in all categories and were particularly depressed in transport.
  • Orders for capital goods non-defense ex aircraft were down by 5.8% m/m after -1.1% m/m the prior month.
  • Trade tensions and disruption in the supply chain could delay recovery in orders after the end of the lockdown and despite improving sentiment in industry.


US: Initial jobless claims (May 23): 2123k vs 2100k expected (prior: 2446k revised from 2438k)

  • Continuing claims: 21052 k after 24912 k past week.


US: GDP (Q1-20): -5% q/q vs -4.8% expected (prior: 2.1%)

  • No major changes in GDP growth estimates, except a larger fall in inventories than estimated previously leading to more negative contribution (from -0.53 pp to -1.43 pp) to Q1 GDP.
  • This has been mitigated by less negative fall in consumption (from -7.6 %q/q to -6.8% q/q), total investment (except sharper fall in equipment); net exports remained negative (-1.32 pp contribution to Q1 GDP).
  • A larger fall is expected for Q2, but Q2 GDP data will not be published before end of July.


US: Pending home sales (April): -21.8% m/m vs -17.3% expected (prior: -20.8%)

  • Sales have sharply fallen for the second month in all major districts; sales were down by 34.6% y/y after -14.5% y/y the previous month.


Eurozone: Industrial confidence (May): -27.5 vs -26.5 expected (prior: -32.5 revised from -30.4)

  • Business sentiment has slightly improved on future production and inventories, while opinions have deteriorated further on orders and exports, stayed very low on unemployment.


Eurozone: Service confidence (May): -43.6 vs -27.9 expected (prior: -38.6 revised from -35)

  • Sentiment has heavily deteriorated on current situation, while opinions on future demand and employment have slightly regained.


Eurozone: Consumer confidence (May): -18.8 as expected (prior: -22)

  • Opinions were slightly less negative on future personal financial situation and economic environment, but the opinions stayed depressed on past/current situation.


Eurozone: CPI (May): 0% m/m vs -0.1% expected (prior: 0.4%)

  • Final data confirmed the decline in headline inflation from 0.8% y/y to 0.5% y/y.


Italy: PPI (May): -3.4% m/m (prior: -1.3%)

  • The monthly fall was driven by lower energy prices (-11% m/m), while prices were mixed/weak in other sectors.
  • PPIs have declined further from -4.9% y/y to -6.7% y/y.


Spain: CPI (May): 0% m/m vs -0.1% expected (prior: 0.4%)

  • Headline inflation has declined further from -0.7% y/y the prior month to -0.9% y/y, due to lower energy prices.


Spain: Retail sales (real) (April): -31.6% y/y (prior: -14.2% revised from -14.1%)

  • A drastic fall of sales in all sectors, including a modest fall in food too.


Poland: Central banks has cut key rates from 0.50% to 0.10%

  • The economy will face a severe recession in 2020, and central bank has pledged in favor of a "whatever it takes" approach to support the activity.


Brazil: Unemployment rate (April): 12.6% vs 13.3% expected (prior: 12.2%)


Brazil: CPI (May): 0.28% m/m vs 0.14% expected (prior: 0.80%)

  • Global inflation index (consumer, producer and construction prices) has shown some moderation from the prior month.
  • At consumer level, prices have sharply declined (-0.6% m/m after 0.13% m/m the prior month), due to lower energy-transport prices; consumer prices have passed below 2% in yearly trend (from 2.63% y/y the prior month to 1.65% y/y).


Sweden: Consumer confidence (May): 77.3 (prior: 74.2 revised from 73.9)

  • Sentiment has improved on future financial situation, while concerns remained on global economic situation and unemployment.


Sweden: Manufacturing confidence (May): 76.8 (prior: 71.4 revised from 70.5)

  • Business confidence has bounced back from very depressed levels.


Sweden: Retail sales (April): 0.2% m/m vs -2.1% expected (prior: -1.5% revised from -1.7%)

  • Sales have stabilized after the large fall seen in the previous month; sales were down by 1.3% y/y after 1.1% y/y the prior month.


Macro economic

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