Switzerland’s 10-year government bond yield eased to just under 0.39%, retreating from an over eight-month high of 0.45% reached on April 7, as geopolitical tensions subsided. The United States and Iran agreed to a conditional two-week ceasefire that will allow shipping to pass through the Strait of Hormuz. This development drove a sharp decline in oil prices, tempering fears of a prolonged energy and inflation shock and reducing expectations that major central banks will adopt a more hawkish policy stance.
On the domestic front, the latest inflation data eased pressure on the Swiss National Bank to adjust its policy settings. Annual consumer price inflation rose to 0.3% in March, from 0.1% in February, the highest rate in a year, underscoring the impact of higher energy costs tied to the conflict in the Middle East. At its March meeting, the SNB left its key policy rate unchanged at 0% for a third consecutive time and reiterated its readiness to intervene in foreign exchange markets to curb excessive appreciation of the Swiss franc.
