Swiss Yields Plunge To New Record Low, 1Y -1.05%

1-Year Swiss interest rates have now crashed 75bps in the last week since the SNB decision to un-peg from the Euro. As the world awaits Draghi's big moment, Swiss rates are sliding more and investors seek the 'safety' of Francs - even if it costs them 1.05% per year for that 'safety'.

Chart: Bloomberg

Comments

[XqWretch]

Why dont they just buy gold?

[me again]

"They' are' Tonnes of it every week. Are you ?

[Haus-Targaryen]

This chart tells me big money is expecting extreme volatility in the next 12 months. 

[madcows]

yup.  main st investors aren't buying francs. big money is.

[SafelyGraze]

hating the -1% return on investment

loving each of the 30% increases in the investment's denomination

[Oh regional Indian]

What a staggeringly bizarro world global floating exchange rates have created.

A system built and ripe for manipulation, insider information, nepotism and nurturing a kleptocracy.

Hmmmm.....wonder who dreamt this scheme up....heh... I think I know ;-)

[GeezerGeek]

All your money are belong to us.

Well, 1%, that is, at least for now.

[SickDollar]

The central banks of China and Switzerland have signed a pact to establish a yuan trading center in Zurich. The deal is expected to increase the number of European transactions in yuan.

Switzerland's central bank said on Wednesday it had signed the agreement with the People's Bank of China. The deal was concluded during the visit of Chinese Prime Minister Li Keqiang to the World Economic Forum in Davos.

According to the agreement, Switzerland will receive a quota of about $8 billion (50 billion Yuan).

“It [the arrangement] will promote the use of the renminbi by enterprises and financial institutions in cross-border transactions, and promote facilitation of bilateral trade and investment," the Swiss National Bank said in a statement.

[Haus-Targaryen]

So Yen trading in; 

London

FFm

Zurich 

(Oh yeah, Vienna too almost forgot). 

Anyone seeing a trend here?  

[zeronero]

Gold? What a fuckig joke. Gold will be worth under $1000 oz by end of year.

[me again]

These negative interest rates were also implemented in 1979 when many serious professionals thought the US Dollar was on it's death throes; and hot capital was pouring into Switzerland. So you can see, this is not a trivial indicator.

[Took Red Pill]

Good point! Bloomberg asks "Is the Dollar next?"

http://www.bloomberg.com/news/2015-01-21/is-dollar-next-investors-reasse...

[AbbeBrel]

Doesn't seem likely that the US Treasury will need to shop around or advertise, like the Swiss, for customers to buy T-bills/bonds/whatever - not like in 1977.  Amazing that the 30 year first made its appearance at *this* time!!

http://www.businessinsider.com/why-the-bond-market-could-repeat-history-...

Shortly after President Nixon severed the dollar’s last remaining connection to gold in 1971, inflation rates started edging higher. The annual CPI readings soared from 3.3% in 1971 to 9% in 1973 and 12% during the Arab oil embargo year of 1974.

[...]

Less than a month after President Carter’s inauguration, the US Treasury issued its first 30-year bond – the 7 5/8s of 2007. Over the next four years this bond lost nearly half its value, as inflation and bond yields both soared toward 15%.

President Carter responded to this dire situation by issuing T-bonds denominated in Deutschemarks and Swiss francs. In 1978, these so-called Carter Bonds came to market, with the hope of attracting investors who would not buy the Treasury’s dollar-denominated bonds. The buyers of these unique bonds fared pretty well; the buyers of traditional Treasury bonds, not so much.

[youngman]

The Swiss can make money off of this....easy money I think

[holgerdanske]

Yes, indeed, Why not just buy gold??

I'm sure many are. The biggest problem is that it is not easily convertible into fiat currency. But the advantage of that is, that if you have the gold coins, you are less likely to spend them.

I have bought gold 5 years ago. It has more or less doubled in my local currency, and it has done well even against the Dollar, that seems to impress so many currently, God know why!!.

However it is down 1/3 from its high. Which does not really matter, if you are not going to use it yet.

I believe that gold will be the saviour of those who have it under their control. And you can give it to your kids, if you don't need it. It is your own reserve banke, run by you and for you. And that is all you really need in these times. Safety and a good nights sleep when everybody else will loss most of what they have.

[yogibear]

Imagine if the Chinese annouced it was unpegging from the US dollar.

Also that a great deal of the US Federal Reserve's gold reserves were transferred to China.

[GetZeeGold]

Get some gold.....throw it in the sock drawer.....and forget about it.

[Gothic Optimism]

I bet the Swiss folks are buying Gold.

They said they were going to defend the peg to the Euro and they went ahead and Unpegged. Then it would be reasonable to presume that when they voted down the buying of Gold, they would just ahead and do so anyway.

[GFORCE]

http://investfts.blogspot.co.uk/2015/01/calling-usdcad-strength.html Keep some cash and silver coins. Maybe a few months worth of food and forget about it. The economy would never be without a reserve currency for long.

[dogbreath]

thats a scary chart.  If the loonie goes to 1.30 that  chart will make a cup and is the handle next.  Loonie to 1.60??    can't imagine that.   Canada's resources and relatively stable banks would suggest that canadian dollars could be a safe haven like the swiss's little brother.  On the other side all levels of government are hopelessly fucked when it comes to revenue.   The oil crash has me wondering whats going to happen in march with the alberta provincial budget.   massive deficit or budget cuts.

[grant]

Like any petrodollar/commodity dollar, the loonie is at the mercy of supply & demand.  The political & financial stability of the country will certainly set a floor on its value since there's lots of non-commodity things worth buying in Canada (land, skilled & educated labour, food)

Of course the loonie will rebound in value when oil, and to a lesser extent, minerals & lumber increase in value.

[firstdivision]

Here, I'll pay you to hold my money. 

[yrbmegr]

I don't know why the Swiss didn't think of this earlier.  Everybody wants a Swiss bank account.  It seems obvious they could charge people for the privilege of having one.

[GMadScientist]

Paranoid von Trapp family seeks refuge in Swiss chalet; film at 11.

[I Write Code]

Next week they will charge interest on the square root of the negative balance.

[Mayer Amschel R...]

Swiss franc, Bitches!

[macambaman]

Having negative interest rates is absurd, it is banking tax.