FX.co ★ Swiss 10-Year Bond Yields at 2022-Lows

The yield on Switzerland's 10-year government bond has decreased to approximately 0.13%, marking its lowest point since January 2022. This decline follows weaker-than-expected domestic inflation figures, sparking speculation about potential rate reductions by the Swiss National Bank (SNB). In October, Switzerland's consumer price inflation unexpectedly dipped to 0.1%, down from the 0.2% observed in the preceding two months. Additionally, consumer prices dropped further by 0.3% month-over-month. Currently, the SNB faces mounting pressure to cut interest rates below the existing 0% threshold, as the latest data contradicts policymakers' predictions of future price increases. Despite this, SNB President Martin Schlegel has shown reluctance to consider rate cuts. Nonetheless, rising deflationary pressures and tapering economic momentum, compounded by steep US tariffs, are steering the debate in that direction. Additionally, the Swiss franc's status as a safe haven adds complexity to the central bank's efforts, as its strength lowers import costs and, consequently, suppresses inflation.