SWITZERLAND: Potential 200% US Pharma Tariffs - Impact on Switzerland [1/2]
President Donald Trump on Tuesday threatened to impose up to 200% tariffs on pharma products “very soon”. However, the administration would “give people about a year, year and a half” to incentivize production relocalisation into the US, and Switzerland might get proprietary assurances on the sector in a US/SZ trade deal, limiting the potential impact of measures imposed by the US more generally. Swiss pharma equities saw some volatility this morning but remained within recent ranges - supporting the view of a limited impact.
- Remember that on July 4, Bloomberg wrote: "The draft of a trade accord between the US and Switzerland contains a provision that the European country will receive preferred treatment in the ongoing national-security investigations to avoid tariffs on pharma exports, according to people familiar with the matter" but "the clause doesn't constitute a guarantee that Washington will hold off on putting tariffs on the industry".
- The Swiss government has agreed to that draft accord according to local news. There are "positive signs" but no agreement yet from the US, according to the reports.
- Swiss "pharmaceuticals, vitamins, diagnostics" exports were CHF122.1bln in the 12 months to May 2025 in nominal terms - that is around 43% of total Swiss exports during that time, or around 6.8% of GDP, while Swiss exports to the US (across products) were CHF58.4bln.
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LOOK AHEAD: Monday Data Calendar: Wholesale Trade Sales & Inventories
- US Data/Speaker Calendar (prior, estimate)
- 09-Jun 1000 Wholesale Trade Sales MoM (0.6%, 0.2%)
- 09-Jun 1000 Wholesale Inventories MoM (0.0%, 0.0%)
- 09-Jun 1100 NY Fed 1-Yr Inflation Expectations (3.63%, --)
- 09-Jun 1130 US Tsy $76B 13W & $68B 26W bill auctions
STIR: Holding Bulk Of Friday’s Hawkish Shift On Payrolls
- Fed Funds implied rates for 2025 meetings have pulled a touch back from Friday’s shift back towards their most hawkish since February but still hold the bulk of the increase seen on a solid payrolls report.
- Cumulative cuts from 4.33% effective: 0bp Jun, 4.5bp Jul, 18.5bp Sep, 30.5bp Oct and 46.5bp Dec.
- As you can see from the table below, the path is back close to levels seen shortly before higher jobless claims a week and a half ago started a run of dovish data that was reversed with the payrolls report.
- There are slightly larger shifts further out the curve but the broad takeaway remains -- the SOFR implied terminal yield of 3.39% (SFRZ6) is 4.5bp lower on the day but still 7bp higher since NFPs after Friday saw its highest close since May 14.
- It’s a quiet data docket both today and tomorrow, with data focus firmly on Wednesday’s CPI report for May.
- The FOMC is now in media blackout ahead of the Jun 17-18 meeting.
US 10YR FUTURE TECHS: (U5) Bearish Threat
- RES 4: 111-30 76.4% retracement of the May 1 - 22 downleg
- RES 3: 111-19+ 1.0% 10-dma envelope
- RES 2: 111-14+ High Jun 5 & 61.8% of the May 1 - 22 downleg
- RES 1: 110-20+ 50-day EMA
- PRICE: 110-03+ @ 11:04 BST Jun 9
- SUP 1: 109-26 Low May 29
- SUP 2: 109-12+ Low May 22 and the bear trigger
- SUP 3: 109-09+ Low Apr 11 and key support
- SUP 4: 108-25+ 0.764 proj of the Apr 7 - 11 - May 1 price swing
The reversal in Treasury futures from last Thursday’s high, undermines a recent bullish theme. An extension would expose support at 109-26, the May 29 low, where a break would open key support and the bear trigger, at 109-12+, the May 22 low. Key short-term resistance has been defined at 111-14+, a Fibonacci retracement and the Jun 5 high. A break of this hurdle would be bullish.
