USD: CHF is the worst Performer on Tariff Import to the US

The Italian unemployment surprisingly stepped higher from low levels in May with further signs that younger cohorts have been under pressure in recent months. 

• The unemployment rate saw a surprisingly large increase in May to 6.5% (cons 6.0) after an upward revised 6.1% in April (initially 5.9%).
• It leaves it at its highest since Jun 2024 after what are now seen to have been recent lows of 6.05% in Oct and Nov 2024 having last been lower in mid-2007.
• Whilst the absolute magnitude of the move is certainly not unprecedented – it last saw 0.4pp declines in Jul 24, Mar 24 and Dec 23 – it’s a little more notable considering it’s the first increase of that size since Jul 23.
• This is however a series that is prone to surprises: it overshot expectations also by 0.5pp in Dec, before a 0.1pp overshoot in Jan, a 0.4pp undershoot in Feb, an in line Mar and a 0.2pp undershoot in Apr.
• Increases in the u/e rate in May were led by younger cohorts, with 15-24 rising 1.7pps to 21.6% (highest since Feb 24), 25-34 +0.9pps to 10.3% (highest since Nov 23), 35-49 +0.3pps to 5.7% (highest since Jun 24) and 50-64 unchanged at 3.7% (technically 3.65% after 3.64% for a higher rounded).
• As for actual changes, unemployment increased by a large 113k in May, with increases across the board: +28k 15-24, +42k 25-34, +32k 35-49 and +10k 50+.
• Somewhat countering this was a still healthy +80k increase in employment, the strongest rise since January and before that Oct 23. It left overall employment rising 1.7% Y/Y or a similar 0.4% on a 3m/3m basis.  
• However, this increase in employment was entirely driven by the 50+ category (+124k) whilst there were declines elsewhere: -6k for 15-24, -29k for 25-34 and -8k for 35-49.
• It further exacerbates a gap between older cohorts, where employment is increasing strongly in part as a factor of an ageing population (50+ employment is 5.9% Y/Y) whilst other ages struggle (-4.1% Y/Y for 15-24, 0.1% Y/Y for 25-34 and -1.3% Y/Y for 35-49). 

Solid 4.375% Mar-28 Gilt auction, as we had expected in our preview given recent performance for this line.

• The 0.1bp yield tail was the lowest this line has seen across seven auctions since November 2024 (prior average including the launch: 0.4bps, excluding the launch: 0.3bps).
• The 3.46x bid-to-cover ratio was also the second highest on record for this line (the April re-opening attracted 3.48x), notable given the step-up in size to GBP5bln.
• The lowest accepted price of 101.324 was above the 101.311 pre-auction mid. The secondary price of the Gilt reached a low of 101.291 just after the bidding deadline, but has since moved back up to 101.324.

LLOY (15th Aug) 78c, bought for 3 in 14k.