2023-04-16 17:44:26
Goldwasser Exchange takes stock of what you need to know to start the week.
Fixed income markets: Reassuring signs on the US inflation front, but…
Bond yields rose from one Friday to the next, the a priori rather reassuring signals on the US inflation front not being considered sufficient enough to allay all the concerns about the end of the cycle of interest rate hikes. the Fed.
The publication of the consumer price index on Wednesday is a good example. Initially, the stronger-than-expected slowdown in the CPI (Consumer Price Index) was welcomed by the bond markets, which then judged that the level of inflation at US consumer level was still too high, to frankly see a pause in the cycle of rising interest rates. The same goes for producers, with the unexpected drop in PPI producer prices in March announced on Thursday.
And U.S. bond yields rallied more sharply on Friday after data showed a slump in retail sales in March. This decline is however less than expected by traders, said an analyst to explain the rebound in rates. The economy is therefore slowing down, but not enough to the liking of investors, so that the majority of them do not question a rate hike of 25 basis points by the Fed at its next meeting on May 3.
Comments by Fed Governor Christopher Waller on Friday that higher borrowing costs were needed to bring inflation back to the Fed’s 2% target reduced bets on further monetary easing. late this year.
Brief. The US 2-year bond yield, which is particularly responsive to monetary policy expectations, is now trading at 4.11%, up 144 basis points Friday-on-Friday and well above its low. up 3.879% for the week, hit after the PPI data.
And investors will still have to be on their toes over the next few days since activity data or even European inflation will dominate the economic calendar this week. They will help determine what happens at the next round of central bank meetings in early May (May 3 for the Fed and May 4 for the ECB).
| 10-year sovereign yield | |||
| 14/04/2023 | 07/04/2023 | 03/01/2023 | |
| UNITED STATES | 3,520 % | 3,405 % | 3,746 % |
| Germany | 2,440 % | 2,186 % | 2,387 % |
| Italy | 4,289 % | 4,027 % | 4,487 % |
| Belgium | 3,118 % | 2,875 % | 3,011 % |
Primary bond market: Walmart is shopping
A rather calm week on the primary bond market, despite this operation carried out by Walmart. The American distribution giant borrowed 5 billion dollars on the debt market, with a solid interest in the key since the order book was closed on a demand exceeding 20.5 billion dollars, all maturities combined. The distributor took the opportunity to reduce the issue premium. Thus, the new ten-year bond line was finally priced with a premium of around 70 basis points compared to the American risk-free rate of similar maturity, against approximately 100 basis points announced at the start of the issue. Walmart borrowed on maturities of 3 to 30 years and coupons ranging from 3.9% to 4.5%.
| Some recently issued bonds | |||||
| Transmitter | Coupon | Maturity | Cut | Size | Devise |
| Siemens Energy Finance BV | 4,00% | 05/04/2026 | 100.000 | 750 millions | EUR |
| Walmart Inc | 4,10% | 15/04/2033 | 2.000 | 1.5 billion | USD |
Currency markets: The dollar recovers in extremis
The dollar had several sessions of decline, after US inflation statistics. The greenback thus chained negative sessions against a basket of reference currencies, before rebounding on Friday after the retail sales data in the United States. The Dollar index therefore limits its loss to 0.5% over five sessions.
The weakness of the dollar benefited the euro which benefited from the arbitrage of forex traders. The latter anticipate further rate hikes in Europe, while across the Atlantic the Fed is about to put an end to its cycle of monetary tightening. Some analysts even anticipate further Fed rate cuts at the end of the year… The European currency climbed to 1.1070 dollars, its highest level since March 2022, to return to 1.0994 on the eve of the week. -end.
| Currencies in sight | |||
| 14/04/2023 | 07/04/2023 | 02/01/2023 | |
| EUR/USD | 1,0994 | 1,0908 | 1,0668 |
| GBP/USD | 1,2415 | 1,2419 | 1,2048 |
| USD/YEN | 133,79 | 132,17 | 130,74 |
Equity markets: LVMH at the pinnacle, descent into hell for Tupperware
Good week for LVMH which on Wednesday posted sales growth well above analysts’ forecasts. The title of the first European market capitalization (448 billion euros after the increase of 7.7% over the week) paraded on the stock market, allowing the transition to the CAC 40 index to beat new historic records. The parent company of Dior and Louis Vuitton has also brought its European competitors in the luxury sector in its wake.
Tupperware had a completely different fate. Indeed, the American manufacturer of the famous plastic containers and other kitchen products has warned that it is facing a serious shortage of cash. On the brink of bankruptcy, undermined by sharply declining sales, a degraded commercial image and significant debt, the Orlando group has also failed to submit its annual report on time, which could lead to a withdrawal of shares from the New York Stock Exchange company. The stock tumbled 35% to $1.57.
The entire Goldwasser Exchange team wishes you a good week.
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