SWITZERLAND: Potential 200% US Pharma Tariffs - Impact on Switzerland [2/2]
Jul-09 10:32
- JP Morgan note generally that "for branded drugs, production had in the past shifted to Europe for tax reasons, but this is no longer so relevant. Such a high tariff [referring to the 200% figure] would be more of an issue for generic drugs though, where production is overseas for traditional cost of manufacturing reasons" - domestic Swiss production tends to be centred in the branded segment, which would then arguably be more akin to relocation to the US.
- In that context, our credit team does view recent US investment projects by Swiss pharmaceutical firms as significant.
- Leerink Partners meanwhile believe Tuesday's announcement by the US administration is net positive for the pharma industry “because tariffs will not be implemented immediately…and it is unclear if the administration will follow through in the future”, according to a note seen by CNBC.
- Details on the measures “will come at the end of the month,” Commerce Secretary Howard Lutnick said after the cabinet meeting (also via CNBC).
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LOOK AHEAD: Monday Data Calendar: Wholesale Trade Sales & Inventories
Jun-09 10:23
- 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
Jun-09 10:19
- 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
Jun-09 10:17
- 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.
