UBS’s balance sheet is bigger than Switzerland’s economy.
Source: @financialtimes
Swiss National Bank Signals Aggressive Currency Intervention
Amid global uncertainty, the Swiss franc surges, pressuring exports and keeping inflation at 0.1%. The SNB plans aggressive intervention: selling francs and buying foreign currencies to weaken the franc. This may trigger U.S. tensions due to past manipulation accusations and tariffs. Switzerland faces a dilemma: protect its economy or avoid political backlash, highlighting how central banks now navigate inflation, geopolitics, trade wars, and market psychology. Source: CNBC
It looks like negative interest rates are returning to Switzerland...
Government bonds with maturities of up to 4 years are now yielding negative returns. Source: HolgerZ, Bloomberg
While the world watches the US Dollar and Yen with bated breath, the "Swissie" just hit its strongest level in over a decade.
Here is why the global markets are shaking: 🚀 The "Gold Nugget" Effect Investors are fleeing to safety. With Gold crossing $5,000/oz and political volatility rocking major powers, the Swiss Franc has become the ultimate "reliable" haven. It’s up 3% this year, following a massive 14% gain last year. 📉 The SNB's Impossible Choice A currency this strong is a double-edged sword. It keeps inflation low (currently at 0.1%), but it puts a massive squeeze on Swiss exporters. The Swiss National Bank (SNB) is now stuck between a rock and a hard place: Cut rates? They are already at 0%. Going negative again is a move they want to avoid. Intervene? Direct intervention risks the "currency manipulator" label and diplomatic friction. 🌍 The Bigger Picture When the "linchpin" of the global economy (the USD) feels erratic, capital doesn't just disappear—it migrates. We are seeing a fundamental shift in where the world stores The Lesson: In a world of volatility, stability is the most expensive luxury on the market. Source: FT
Although the Swiss Franc has been the strongest currency in the world, the purchasing power degradation in ‘real’/’hard’/gold terms over the last 20 years has been massive
Chart below shows Gold price in Swiss Francs – the “hardest” fiat currency in the world has lost 80%+ of its purchasing power !) Source: Goldman Sachs, zerohedge
🛑 In case you missed it... Swiss Inflation Just Hit ZERO! What will the SNB do ??? 🤯
Just days before their final 2025 rate decision, Switzerland threw the central bank (SNB) a curveball. Consumer prices came in UNCHANGED in November from a year ago. That's ZERO inflation. What does this mean for money managers and global markets? 📌 The Core Dilemma: Core inflation slid to its weakest in over four years. The SNB's 0.4% inflation forecast for this quarter is now officially dead in the water. 📌Negative Rates... Again? No yet. While the headline number is scary, it's unlikely the SNB will panic-cut rates back into negative territory next week. The market's real focus is the 2026 Inflation Forecast. Will the SNB slash its current 0.55% projection? That’s the real tell. 📌The Franc's Resilience: Despite the low inflation and fears of negative interest rates ahead, the CHF (Swiss Franc) is shrugging it off and staying strong. The SNB might wish for a weaker currency to "kindle" inflation via intervention, but we continue to think the Franc is UNLIKELY to weaken much and will rather remain strong. The Bottom Line: Low inflation is back in the spotlight for the safe haven currency. Watch the SNB's forward guidance, not just their rate decision Source: Bloomberg
We have a deal!
Among the $200B Swiss investment pledges, the US representative cites pharmaceuticals, the gold industry, and even the railway sector.
This is ugly...
EURCH is at a critical support level.
