Switzerland’s 10-year government bond yield has risen to 0.4%, its highest level since late July and poised for a weekly gain of 19 basis points, as investors reassess inflation risks stemming from the escalating conflict in the Middle East. Mounting geopolitical tensions have intensified fears of potential disruptions to global oil supplies, driving energy prices higher and prompting markets to pare back expectations for further interest rate cuts by the Swiss National Bank (SNB).
At the same time, policymakers remain alert to the risk of renewed Swiss franc strength amid safe-haven inflows. SNB Vice-President Antoine Martin reiterated that the central bank stands ready to intervene in foreign exchange markets to counter excessive appreciation of the franc, noting the increasingly complex geopolitical backdrop.
On the data front, Swiss consumer price inflation was unchanged at 0.1% in February for the third consecutive month, defying expectations of a 0.1% decline but still hovering at the lower bound of the SNB’s 0–2% target range.
