Syz the moment

A stronger CHF poses significant challenges for Swiss firms, particularly exporters, as it erodes their pricing power on the global stage. This could pressure corporate margins and economic growth in Switzerland. Note that the August 2011 high at 1.3125 is not too far away. What will the SNB do in case of breakout? Heavy use of its balance sheet (at the risk of being pointed out by Trump as a currency manipulator) and/or negative interest rates?

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How long until the Atlanta Fed also excludes soaring physical gold EXPORTS TO Switzerland to reduce the surge in Q2 GDP??? Source: zerohedge

In 2024, Switzerland ($116 billion), the United Kingdom ($66 billion), Hong Kong ($57 billion), and the United Arab Emirates ($53 billion) emerged as the world’s top gold exporters. These same economies also featured prominently among the top gold importers: Switzerland ($105 billion), the UK ($77 billion), Hong Kong ($65 billion), and the UAE ($77 billion). Meanwhile, China ($103 billion) and India ($52 billion) ranked as major gold importers but exported far less—$90 billion for China and $1 billion for India—making them the world’s largest net gold importers. Source: Econovis @econovisuals

Specifically, the one-month CHF government bill yield indicates a scenario where holders of Swiss francs are willing to pay the borrower instead of receiving interest. Source: C. Vayenas

After a brief rebound in January, the downward trend for Swiss watch exports resumed last month. According to the Federation of the Swiss Watch Industry, overall exports fell 8.2%, with 102,000 fewer watches shipped . The decline was broad-based across key markets and price segments: Mid-range watches (CHF 500–3,000): -15.4% High-end watches (> CHF 3,000): -7.3% Entry-level watches (< CHF 200): The only category to post a positive result. source : swissinfo

This rate cut follows the slowdown in inflation observed in the recent months, down to +0.3% in February. Low ongoing inflationary pressures, and the fact that inflation is now at the very bottom of the 0-to-2% target range of the SNB, warranted this additional decline in short-term interest rates. Indeed, with the SNB key rate at 0.25%, short-term real rates are brought down a marginally negative level that will help alleviate deflationary pressures and upward pressures on the Swiss franc. As such, monetary policy can be described as moderately accommodative, a stance appropriate to the combination of low inflationary pressures and moderate economic growth in Switzerland. ➡️ Looking ahead, expected developments on inflation and economic activity suggest that the rate cut cycle initiated a year ago is now completed. The 150bp decline in CHF short term-rates over 12 months, in parallel of the decline in inflation, has helped supporting economic activity and stabilizing the level of the Swiss franc. Inflation is now expected to stabilize in the coming months and even slightly pickup at the end of the year (toward +0.6%) and in 2026 (+0.8%). In the meantime, economic activity is projected to gradually improve, supported by higher real income for households due to the low level of inflation, and by more accommodative financing conditions. The stabilization and even slight pullback of the Swiss franc also removes a headwind for Swiss exporters. ➡️ However, the outlook is currently extremely uncertain for Switzerland and for the global economy: Potential tariffs on US imports from Switzerland and other European countries could significantly impact economic activity and confidence. They could also possibly revive upward pressures on the Swiss franc. Such scenario would eventually lead the SNB to further lower its key rate down to zero. The possibility of a return to negative interest rates cannot be ruled out in case of pronounced downward pressures on growth, along with upward pressures on the currency. However, such possibility would in our view require a significant deterioration in the economic environment. Moreover, the SNB is more likely to resort to interventions on the Forex market as a first option in case of unwarranted upward pressures on the CHF. Conversely, ongoing developments in the neighbouring Eurozone, and more specifically the prospect of a huge fiscal stimulus in Germany, could have a significant positive impact for Switzerland. and fuel firmer inflationary pressures, possibly paving the way for the SNB to adjust its key rate upward in consequence in 2026. ➡️ Our take >>> Today’s rate cut is likely to be the last of this monetary policy easing cycle for the SNB. However, we will continue to monitor both downside and upside risks to this scenario. Adrien Pichoud

The Swiss government has trimmed its economic growth outlook for 2025 and 2026, citing global trade tensions. SECO now expects: 📉 2025 GDP: 1.4% (previously 1.5%) 📉 2026 GDP: 1.6% (previously 1.7%) While growth remains below the long-term average of 1.8%, Switzerland is still expected to avoid a recession. This adjustment comes just before the Swiss National Bank’s policy decision on Thursday—a key event to watch. source : reuters