FX.co ★ Swiss 10-Year Yield Falls 10bps in January

In late January, the yield on the Swiss 10-year government bond stood at 0.2%, reflecting a reduction of nearly 10 basis points since the beginning of the year, marking its lowest level in almost eight weeks. This development aligns with recent economic trends that suggest the Swiss National Bank (SNB) may maintain an accommodative monetary policy in the medium term. December saw the headline inflation rate at 0.1%, which remains below the yearly average and lags significantly behind the inflation levels of Switzerland's Eurozone counterparts. Additionally, GDP figures indicated a 0.5% contraction in the third quarter, largely attributed to the effects of US tariffs. Supporting the case for reduced borrowing costs, the Swiss franc surged to a decade high, driven by foreign investors seeking a safe-haven currency amidst a declining dollar. Although SNB policymakers have expressed hesitation about reducing rates into negative territory, a minor segment of the market is anticipating a rate cut by June.