The yield on the Swiss 10-year government bond fell below 0.5% in August, the lowest in over three months as worse than expected business confidence and PMI figures in Europe added to concerns of an incoming recession. Risk sentiment was further dented amid signals that the Swiss National Bank may extend its hawkish pivot. A Swiss newspaper reported that SNB policymakers contemplate a 50bps and a 75bps rate hike in the central bank’s September meeting. Such a move would follow up the unexpected 50bps interest rate increase in its last meeting, the first rate hike since 2007 after the bank held borrowing costs at a record low of -0.75% since 2015. Switzerland's continuously elevated CPI supports Chairman Jordan’s remarks that restrictive monetary policy is necessary to bring inflation back to the 2% target, as the latest forecasts project price growth to only normalize by 2025 at the current borrowing costs.
Historically, the Switzerland Government Bond 10Y reached an all time high of 5.63 in September of 1994. Switzerland Government Bond 10Y - data, forecasts, historical chart - was last updated on August of 2022.
The Switzerland Government Bond 10Y is expected to trade at 0.60 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 0.79 in 12 months time.