Swiss 10-Year Bond Yield at Over 1-Month High

The Swiss 10-year government bond yield was around 0.27%, down from recent over one-months highs, as investors worldwide weighed the prospect of policy easing by the Federal Reserve following softer-than-expected US inflation data. On the domestic front, latest inflation data did not alter expectations that the Swiss National Bank will maintain an accommodative stance in the foreseeable future. Swiss inflation held at 0.1% year-on-year in January, matching December's reading and sitting at the bottom of the SNB’s 0%–2% price-stability range. SNB President Martin Schlegel recently said that the central banks is prepared to accept short periods of negative inflation while keeping focus on medium-term targets. Meanwhile, safe-haven demand persisted amid heightened risk sentiment, driven in particular by concerns over AI’s impact on the global economy.

The Swiss 10-year government bond yield eased to around 0.28%, down from recent over one-months highs, as investors adjusted their positions ahead of key US CPI data, which may offer fresh insights into the Fed’s policy direction. On the domestic front, latest inflation data did not alter expectations that the Swiss National Bank will maintain an accommodative stance in the foreseeable future. Swiss inflation held at 0.1% year on year in January, matching December's reading and sitting at the bottom of the SNB’s 0%–2% price-stability range. SNB President Martin Schlegel recently said that the central banks is prepared to accept short periods of negative inflation while keeping focus on medium-term targets. Meanwhile, sustained safe-haven demand remained supportive.

The Swiss 10-year government bond yield rose to 0.32%, the highest since December last year, amid ongoing safe-haven demand and expectations of an accommodative stance by the Swiss National Bank. Persistent concerns surrounding artificial intelligence and reports that Chinese regulators have advised financial institutions to curb exposure to US Treasuries amid policy uncertainty contributed to market caution. In the meantime, traders remained attentive to macroeconomic data for insights into the interest rate outlook. Switzerland’s January inflation data, due on February 13, is expected to show annual inflation at a subdued 0.1%. Meanwhile, the SNB is expected to keep interest rates at 0% in the near term, as inflation is deemed to be on target over the next two years and the threshold for negative rates remains high.