Switzerland’s 10-year government bond yield climbed to around 0.39%, broadly in line with other major markets, as investors reassessed geopolitical risks. Hopes for a rapid resolution of the conflict in the Middle East were shaken after President Donald Trump, in a televised address, said US forces are close to completing their mission but will maintain heavy military action in the coming weeks. That commentary rekindled fears of a prolonged energy shock and renewed upward pressure on inflation.
At the same time, the latest inflation data reduced the immediate pressure on the Swiss National Bank to adjust its policy stance. Annual consumer price inflation rose to 0.3% in March from 0.1% in February, the fastest pace in a year and a clear sign of the impact of higher energy prices linked to the Middle East conflict. However, the figure came in below the 0.5% consensus forecast and remains close to the lower bound of the SNB’s 0–2% target range.
