Weekly Insight

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Weekly Insight

US equities recorded losses for the week after Fed Chairman Jerome

Powell acknowledged that Fed officials have begun to discuss slowing the central bank’s bond purchases, the 1st _{step toward eventually raising} interest rates (refer to the

Chart of the Week

for full details on FOMC members projections). The decline accelerated after late-week comments from Fed’s President James Bullard that he expects first rate hike in 2022. European shares fell after the Fed indicated that it would increase rates earlier than previously expected. The European Commission signed off on the first two national recovery plans (those of Spain and Portugal) supported by the Next Generation EU fund. The Covid-19 saga and its back and forth panoply of measures continued in Europe after UK Prime Minister Boris Johnson delayed a full reopening of society in England, initially planned for June 21, for another month as the number of infections caused by the delta variant has surged in the UK. France ended the night time curfew that was in place since October.

In Asia, Chinese equities recorded their 3rd_{consecutive weekly loss while} Japanese stocks ended the week mixed. Weaker-than-expected May economic data from the National Bureau of Statistics led some China economists to conclude that the country’s growth momentum may have peaked. At its June monetary policy meeting, the Bank of Japan left key policy rate targets and guidance unchanged, as widely expected, and in a surprise move, announced a measure to support climate change mitigation. The new initiative will provide funds for bank lending to climate-friendly businesses.

MARKET OVERVIEW

Hawkish Fed Damps Risk Assets Appeal

Despite J. Powell noting that the Fed dot plot should be taken with a ‘big grain of salt’, market participants chose to take the quarterly change in rate anticipations by the Fed members at face value. The new dot plot flags two rate hikes in ‘23 rather than one with a likely tapering of QE end of ‘22. This resulted in a more cautious tone in an environment where anticipations towards a less accommodative monetary policy are meeting very strong economic growth numbers and the slight rise in infections from the delta variant.

High valuations in risk markets are naturally prompting a more skittish reaction from market participants to increasingly hawkish comments from Fed officials. This ignores the fact that the Fed is no longer the only game in town with broad based recovery support programs that are still to start their implementation phase and an inflationary environment, which could hobble consumption even on a temporary basis. In the tussle between monetary policy and fiscal expansion, it will

CHART OF THE WEEK

Talk About Talking About Tapering

Economic calendar

Period Date Expected AU Retail Sales MoM May P 21.06.21 0.4% Eurozone Markit Manufacturing PMI Jun P 23.06.21 62.0 FR Markit Manufacturing PMI Jun P 23.06.21 59.0 GE Markit/BME Manufacturing PMI Jun P 23.06.21 63.0 JN Jibun Manufacturing PMI Jun P 23.06.21 Not Avail. US Markit Manufacturing PMI Jun P 23.06.21 61.5 US New Home Sales May 23.06.21 871.0k GE IFO Business Climate Jun 24.06.21 100.6 GE IFO Expectations Jun 24.06.21 103.62 US GDP Annualized QoQ 1Q T 24.06.21 6.4% US Initial Jobless Claims Jun 19 24.06.21 380.0k BR IBGE Inflation MoM Jun 25.06.21 0.9% Eurozone M3 Money Supply YoY May 25.06.21 8.5% JN Tokyo CPI Ex-Fresh Food YoY Jun 25.06.21 -0.1% US Personal Income MoM May 25.06.21 -2.7% US Personal Spending MoM May 25.06.21 0.4% US Univ. of Michigan Sentiment Jun F 25.06.21 86.5

21.06.2021 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% Im p lie d F e d F u n d s T a rg e t R a te

FOMC Dots Median FOMC Members Projections

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North America

YTD Performances Fixed Income Canada Mexico Convertible * in $ terms Equities Currencies GDP (% change Y/Y) Economic GDP (% change Q/Q) data Inflation rate (Y/Y)

Unemployment rate (%) Debt (as % of GDP) Budget Balance Rating

Central Bank Rate 2Y Government Rate 10Y Government Rate

Yield 1W YTD Yield 1W YTD

DEPOSIT GOVERNMENT BONDS CORPORATE BONDS EQUITY USD

0.1%

-1.8%

1.0%

11.5%

3.0%

10Y 1.4% -0.1% -3.4% 5-10Y* 2.0% US 2Y 0.3% -0.2% -0.1% Investment Grade 0.0% -1.3% 10+Y* 3.1% 1.8% -2.1% 1-5Y* 0.9% -0.3% 0.0% MSCI N. AMERICA 2Y 0.4% -0.2% -0.2% 1W YTD 22 4'247 -1.7% 11% Cons. Disc. 35 588

P/E Last 1W YTD P/E Last

0.1% 6% 1%

DOW JONES 20 33'290 -3.4% 9% Energy 19 203 -5.2% 36%

S&P 500 22 4'166 -1.9% 11% Cons.Staples 21 270 -3.0%

19%

TORONTO 17 20'000 -0.7% 15% Health Care 18 402 -0.8% 9%

NASDAQ 33 14'030 -0.3% 9% Financials 13 190 -6.0%

11%

US Large Cap 23 2'807 -1.5% 10% Inf. Technology 29 576 0.5% 8%

MEXICAN IPC 15 50'320 -1.9% 14% Industrials 25 385 -3.5%

US Small Cap 26 972 -4.3% 14% Materials 17 361 -6.3% 11%

US Value 17 11'017 -3.9% 13% Telecom Serv. 24 86

US Growth 35 17'250 0.6% 9% Utility 19 187 -3.2% 1%

Last 1W YTD Last 1W YTD

-0.9% 16%

5.09 0.5% 2.1%

1 USD vs CHF 0.9216 -2.5% -3.9% 1 USD vs MXN 1 USD vs EUR 0.8429 -2.0% -2.9% 1 USD vs BRL

20.66 -3.8% -3.6% -1.0%

1 USD vs JPY 110.21 -0.5% -6.3% 1 USD vs RUB 72.84 -1.0% 2.2%

1 USD vs GBP 0.7243 -2.1% 1.0% 1 USD vs NOK 8.67 -3.8%

5.0 2.4 5.9

6.4 0.4 0.8

1 USD vs AUD 1.3371 -2.9% -2.8% 1 USD vs SEK

0.4 1.5 -3.6 8.61 -3.4% -4.5% US CA MX -15.6% -1.7% -1.4% 82.3 89.7 54.2 5.8 5.4 3.5 0.25% 0.25% 0.3% 0.4% 1.4% 1.4% 6.8% 10Y 6.8% - -5-10Y* 4.2% -0.1% 2.1% 10+Y* 4.5% 0.2% 3.1% 4.00% 5.1% AA+ AAA BBB+ 1-5Y* 3.5% 0.0% 4.2% Global * 1.2% -0.5% 4.0% 10Y 1.4% -0.1% -4.6% 2Y 5.1% - -High Yield

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Europe

YTD Performances Fixed Income Convertible * in € terms Equities Currencies GDP (% change Y/Y) Economic GDP (% change Q/Q) data Inflation rate (Y/Y)

AA AAA -0.75%

-0.3%

-1.5%

0.1%

12.1%

-0.5%

7.1 4.7 3.1 AAA AA BBB A- BBB 7.3 6.0 7.3 10.7 15.5 -0.5 2.0 2.5 1.4 1.3 2.7 1.2 2.1 0.6 -6.1 -0.5 -0.3 -1.8 -0.1 0.1 -0.5 -3.3 -1.5 UK CH -1.3 -3.4 1.2 -0.8 -4.3 -5.4 Europe GE FR IT ES PT

DEPOSIT GOVERNMENT BONDS CORPORATE BONDS EQUITY EUR

P/E Last 1W YTD

-4.1% YTD 2Y -0.8% 0.0% -0.4% 10Y -0.2% 0.0% -1.9% -0.1% -0.4% 2Y 0.1% -0.1%

1 EUR vs JPY 130.74 1.6% -3.5% 5.1% 1 EUR vs MXN 24.51 -1.8% -0.8% 1 EUR vs AUD 1.5864 -1.0% 0.1% 1 EUR vs CHF 1.0946 -0.7% -1.2% 1 EUR vs GBP 0.8591 -0.1% 4.0% 1 EUR vs SEK 10.22 -1.4% -1.6% 1 EUR vs USD 1.1864 2.1% 3.0% 1 EUR vs NOK 10.29 -1.8% 1.9% 1 EUR vs RUB 86.37 1.0% 4.9% 1 EUR vs BRL 6.04 2.6% -1.1% 13% 17 136 -0.1% -1% -1.3% 18% 12 332 -4.0% 11% 0.5% 11% 24 318 -0.6% 15% -2.4% 16% 11 62 -2.0% 16% -1.7% 20% 21 290 0.1% 10% Telecom Serv. Utility 17 55 Inf. Technology Materials 32 170 Health Care Industrials 19 236 Energy Financials 11 104 Cons. Disc. Cons.Staples P/E MIB 13% PSI 20 3% SMI 12% 18% DAX 13% FTSE 100 9% IBEX 35 12% 19 11'941 0.8% MSCI EUROPE 13% STOXX 600 13% STOXX 50 CAC 40 14 25'218 -1.9% 17 5'064 -1.6% 14 7'017 -1.6% 19 9'031 -1.9% 18 6'569 -0.5% 15 15'448 -1.6% Yield 1W YTD High Yield 1-5Y* 2.8% -0.1% 3.1% 5-10Y* -10+Y* 0.0% -2.3% - -10+Y* - - -0.4% 0.7% 0.2% -0.1% 1-5Y* 5-10Y* -0.1% -0.4% -0.1% Switzerland United Kingdom Yield 1W YTD Investment Grade Europe 2Y -0.7% Germany 2Y -0.7% 10Y -0.2% -0.5% -2.3% -0.4% 0.0% -0.4% 10Y -2.6% 98.1 64.1 97.0 131.5 98.4 125.6 87.0 42.8 -5.7% -11.0% -9.5% -9.2% -4.2% 0.10% -0.2% -0.2% -2.2% -2.6% 18 452 -1.2% 19 4'083 -1.0% 10Y 0.8% -0.4% 17 150 -1.1% Last 1W 15% 21 225 Global * 0.5% -0.5% 3.6% -0.2% -0.2% 0.2% 0.9% 0.4% 0.4% 0.8% -0.2% -0.7% -0.7% -0.6% -0.3% -0.5% -0.6% 0.1% -0.8% 0.00%

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Asia

YTD Performances

Fixed Income

Equities

1 USD vs AUD 1 USD vs CNY Currencies 1 USD vs HKD 1 USD vs IDR

1 USD vs JPY 1 USD vs INR 1 USD vs NZD 1 USD vs KRW 1 USD vs SGD 1 USD vs MYR

GDP (% change Y/Y) Economic GDP (% change Q/Q) data Inflation rate (Y/Y)

Yield 1W YTD

JAPAN CHINA INDIA SOUTH KOREA ASIA PACIFIC

5.5%

-2.1%

9.6%

13.7%

3.8%

10Y 3.1% 0.1% 1.6% China 2Y 2.7% - -2Y -0.1% 0.0% -0.1% Japan 10Y 0.1% -0.2% -0.1% -10Y 1.6% -0.9% -3.2% 2Y 4.7% - -1W YTD 16 207 -1.1% 4% Cons. Disc. 23 261

-0.8% -1% -2%

HANG SENG 13 28'801 -0.1% 6% Energy 12 416 -2.5% 11%

NIKKEI 225 19 28'964 0.1% 6% Cons.Staples 25 274 -0.7%

-0.9%

8%

SENSEX 23 52'344 -0.2% 10% Health Care 31 469 -0.7% -2%

CSI 300 16 5'102 -2.3% -2% Financials 10 190 -1.8%

Materials 11 345 -4.2% 6% 6%

S&P/ASX 200 19 7'369 0.8% 12% Inf. Technology 20 569 0.1% 7%

KOSPI 12 3'268 0.6% 14% Industrials 17 219

-3.7% 2%

-0.2% 3% Telecom Serv. 20 152 Utility 14 109 14375 -1.3% -2.3% 110.21 -0.5% -6.3% 6.45 -0.8% 1.1% 7.7628 0.0% -0.1% 1.3371 -2.9% -2.8% 1132 -1.8% -4.0% 1.3451 -1.4% -1.7% 73.87 -1.1% -1.1% 1.44 -2.8% -3.5% 4.14 -0.7% -2.9% AU NZ SK HK SI 18.3 -1.6 1.6 1.1 2.4 1.9 7.9 1.3 5.4 3.1 1.3 -0.1 12.9 1.1 1.5 2.6 1.3 2.1 0.6 -1.0 - 1.8 1.6 1.7 -3.6% 0.9% -8.5% -4.0% 6.0 3.5 47.8 236.4 70.2 41.6 26.4 39.8 0.1 4.2 2.8 8.5 5.1 4.7 3.8 0.25% 4.00% 0.10% 1.50% 0.10% MSCI ASIA PACIFIC

AA AA+ AAA A+ A+ BBB- AAA AA 110.9 -6.2% -10.1% -4.4% -0.1% 0.1% 0.4% 1.2% 0.1% 0.4% 3.1% 0.0% 6.0% 1.5% 1.7% 2.0% 1.2% 1.4% India Australia 2Y 0.1% -0.1% 0.1% 2.7% -0.1% -CN JP IN 10Y 6.0%

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-Emerging Markets & Other Countries

YTD Performances Fixed Income Equities Currencies GDP (% change Y/Y) Economic GDP (% change Q/Q) data Inflation rate (Y/Y)

Last 1W YTD

BRAZIL RUSSIA ISRAEL EAST EUROPE LATAM

7.9%

18.7%

12.7%

15.6%

6.3%

Israel 2Y 0.0% 0.1% 0.0% Chile Last 1W YTD -0.8% -2Y 1.5% -0.2% -3.1% 10Y 1.2% 0.6% -4.1% 10Y 4.4% Russia 2Y 6.6% -0.4% -3.9% 10Y 7.2% 0.5% -7.4% 10Y 9.3% -1.5% 3.2% South Africa 2Y 5.3% -0.1% 1.0% Brazil 2Y 7.3% -0.1% -6.1% 10Y 9.5% -0.9% -13.0% 1W YTD 14 1'361 -1.5% 5% Cons. Disc. 29 926

-0.6% -4% 10 2'606 -1.5% 6% Cons.Staples 25 522 -1.2% 1% 9 188 -2.4% 16% Energy 9 575 -1.5% 14% 11 1'444 -2.5% 6% Financials 9 343 -2.1% 7% 13 1'690 -0.2% 13% Health Care 38 1238 -1.9% 5% 8 1'647 -1.9% 19% Industrials 13 195 -1.2% 12% 11 59'504 -3.2% 9% Inf. Technology 18 1010 -0.6% 7% 14% Telecom Serv. 22 233 Utility 12 220 -5.0% -4.4% 11 128'405 -0.8% 8% Materials 8 502 4%

0.1% 7%

1 USD vs CLP 748.42 -3.5% -4.9%

-4.4% 2.4%

1 USD vs BRL 5.0903 0.5% 2.1%

1 USD vs ARS 95.38 -0.3% -11.8% 1 USD vs ZAR

1 USD vs RUB 72.84 -1.0% 2.2% 1 USD vs ILS 3.28 -0.7% -2.0% -11.5% -10.8% 11.0 23.6 52.6 10.2 AA-61.0 5.4 A B 19.6 4.4 56.2 3.7 1.2 -4.1 -AR -3.2 1.0 29.5 -5.8 SA BZ CL 0.10% 1.5 BB BB-8.5 14.35 6.0 32.6 52.7 17.4 -3.0% BBB-5.2 3.50% 5.50% 4.25% 32.50% 0.50% RUSSIAN RTS TEL AVIV 25 GLOBAL EM EM LATAM SOUTH AFRICA FTSE/JSE AFRICA IBOVSPA BRAZIL 84.0 8.2 8.1 RU IL EM EAST EUROPE -1.1 -0.7 9.0 0.1% 6.6% 5.4% 7.3% 43.4% 1.5% 1.2% 7.1% 7.1% 9.5% 46.2% 4.4%

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Commodities & Others

YTD Performances

Global Commodity Agriculture Aggregated Precious metals Grains

Indices Energy Livestock

Industrial metals

Gold ($/oz.) WTI Crude ($/bbl.) Precious metals Silver ($/oz.) BRENT Crude ($/bbl.) & Energy Platinum ($/t oz.) Natural Gas ($/MMBtu)

Palladium ($/t oz.)

Steel ($/T.) Corn ($/bu.) Industrial metals Aluminum ($/mt) Wheat ($/bu.) & Agriculture Copper ($/lb.) Soybean ($/bu.)

Iron Ore ($/mt) Nickel ($/mt)

Hedge Funds (in $) S&P Global Timber and Forestry Others Hedge Funds (in Eur) Baltic Dry index

US Volatility DJ Equity REIT EU Volatility Dollar Index Bond Move Index EM Currency Index

GOLD OIL ENERGY INDUSTRIALS AGRICULTURE

-7.1%

45.4%

37.7%

12.2%

14.4%

318 -6.3% 12% -7.2% 15% 48 -3.0% 10% 117 -7.0% 14% 469 -6.3% -6% 85 194 -4.3% 17% 38% 60 -0.2% 1.0% 48% 26 -7.6% -2% 74 1W YTD 1'764 -6.0% -7% 72

Last 1W YTD Last

-2.5% 20% 2'475 -10.9% 1% 1.1% 43% 1'043 -9.3% -3% 3 2% 37% 1'313 -8.7% 18% 1'229 1.2% 112%

Last 1W YTD Last 1W

1'108 -0.4%

1'429 -0.4% 4% 3'163 -4.5% 7%

1W YTD

17'154 -5.9% 3%

Last 1W YTD Last

566 -7.1% 30% 2'375 -3.2% 19% 666 -2.9% 6% 416 -8.4% 18% 60 18.9% 23% 57 -2.3% -2% 1'661 0.9% 97% -3.0% 20% 21 -11% 1'145 2.0% 13% 136% 21 32% -9% 2'529 3% 3'218 YTD

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