Rush To Safety Accelerates: 2 Year Treasury, USDCHF Both Plunge
Earlier today, Thomas Jordan of the Swiss National Bank stated that banks may need to triple their current common equity level, essentially undoing all the carefully prepared propaganda of Basel III, and validating just how undercapitalized banks throughout the world truly are. And while the regulators will likely completely ignore his message, the market appears to have noticed: the USDCHF fell to a fresh 2.5 year low of 0.9702, which is making Swiss exporters very, very unhappy. Additionally, the dollar weakness of recent days has reversed this morning especially on continuing Irish sovereign fears (especially after the whole Irish PM Citi conference circus), even as the Dollar-Yen continues to attack that critical 83 level which was the barrier for the BOJ's last intervention on September 15. It seems all the Chinese posturing of bailing out Europe is now completely priced in - oddly enough nobody seems to care that China is willing to provide vendor financing to broke European countries.All of this has driven the 2 Year UST to a fresh all time low yield of 0.3987%, as the Fed's finger salute to the saving middle class becomes ever more distinct.