Tag Archives: 2) Swiss and European Macro

The Producer Price Index (PPI) or officially named “Producer and Import Price Index” describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation. The Swiss PPI values of -6% in 2015 (see below), compared to -3% in Europe or -1% in...

The recent recovery in industrial activity seems to have stalled, probably because of the collapse in external demand and high levels of vigilance inside China. Since the large-scale coronavirus infection was contained, the Chinese government has been trying hard to get the economy back on track. The end of the lockdown in Wuhan after two in a half months is an important milestone in that respect. But in the past couple of weeks, economic recovery has come up...

While expecting long-term yields to be capped, we remain neutral on US Treasuries. We think peripheral euro area bonds to avoid the levels of stress seen during the sovereign debt crisis. On 23 March, the Fed announced unlimited quantitative easing (QE), or “QE infinity”. Ramping up its purchases of Treasuries to a daily pace of USD75 bn, it currently owns 18% of all US Treasuries outstanding, but could easily own between 40%-50% by the end of the year. We remain...

02.04.2020 – The consumer price index (CPI) increased by 0.1% in March 2020 compared with the previous month, reaching 101.7 points (December 2015 = 100). Inflation was –0.5% compared with the same month of the previous year. These are the results of the Federal Statistical Office (FSO). The 0.1% increase compared with the previous month can be explained by several factors including rising prices for clothing and footwear due to the end of the seasonal sales. New...

The reading of the KOF Economic Barometer dropped drastically in March and is now with 92.9 well below its long-​term average. Accordingly, the Swiss economy can be expected to see a marked decline in growth rates in the near future. This plunge of the Barometer reflects the first economic consequences of the accelerated spread of the Coronavirus. The KOF Economic Barometer fell by 8.9 points in March, from 101.8 (revised from 100.9) down to 92.9. The...

We do not like Purchasing Power or Real Effective Exchange Rate (REER) as measurement for currencies. For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity gains, while the REER assumes constant productivity in comparison to trade partners. Who has read Michael Pettis, knows that a rising trade surplus may also be caused by a higher savings rate while the trade partners decided to spend more. This is partially...

Bern, 16.03.2020 – At an extraordinary meeting today, 16 March 2020, the Federal Council took the decision to introduce more stringent measures to protect the public. It has declared that an ‘extraordinary situation’ now exists in Switzerland in terms of the Epidemics Act. All shops, restaurants, bars and entertainment and leisure facilities will remain closed until 19 April. Not affected by the new ruling are food stores and healthcare institutions. As of...

Unemployment Rate (not seasonally adjusted) Bern, March 9th, 2020 – Registered unemployment in February 2020 – According to surveys by the State Secretariat for Economic Affairs (SECO), 117,822 unemployed people were registered with the regional employment centers at the end of February 2020, 3,196 fewer than in the previous month. The unemployment rate fell from 2.6% in January 2020 to 2.5% in the reporting month. Unemployment decreased by 1,651 people (-1.4%)...

04.03.2020 – The consumer price index (CPI) increased by 0.1% in February 2020 compared with the previous month, reaching 101.6 points (December 2015 = 100). Inflation was –0.1% compared with the same month of the previous year. These are the results of the Federal Statistical Office (FSO).The 0.1% increase compared with the previous month can be explained by several factors including rising prices for air transport. International package holidays also recorded an...

28.02.2020 – Turnover adjusted for sales days and holidays rose in the retail sector by 0.6% in nominal terms in January 2020 compared with the previous year. Seasonally adjusted, nominal turnover fell by 0.6% compared with the previous month. These are provisional findings from the Federal Statistical Office (FSO). Real turnover adjusted for sales days and holidays fell in the retail sector by 0.1% in January 2020 compared with the previous year. Real growth takes...