Europe's "Teleportation To Safety" In One Chart

Tyler Durden's picture

While European credit markets have been a roller-coaster today - returning back to their wides now - there is one thing that has remained constant. The inexorable flood of money into Switzerland. Rather shockingly 2Y Swiss interest rates have dropped to -26bps (yes, no typo - you pay 26bps to allow the Swiss government to borrow your money). These are obviously record lows and suggest that events are unfolding extremely rapidly (and those bets on the unsustainability of the SNB peg may be gathering pace).

2Y Swiss Government interest rates are accelerating lower...

and intraday it looks even more incredible...

 

Today saw the single-biggest drop in 2Y swiss interest rates ever as safety flows are clearly increasing very rapidly...

Chart: Bloomberg

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Ted Baker's picture

SNB HAS LOST ITS POWER TO CONTROL THE FLOOR PERIOD

noses's picture

You mean they lost control over their bladder muscles? Probably. After all that's probably how Lake Zurich came into existence...

gojam's picture

Or Sphincters......................

Messy.....

TheGardener's picture

"teleporting" !!! Into a Swiss cheese hole !

Dumb money rules and Europe is beyond sanity and rule.

Wire your fiat anywhere and sorry, we could not process your
transfer because of central bank floods. While we could not
credit your funds held in clouds, we apologize that any
precipitation that does not reach the ground will still be taxed at the 100% virga rate.

potlatch's picture

oh that was very, very good.  top of the day to you sir!

Tense INDIAN's picture

something has happened or are these low yields indicative of something

coming

brooklynlou's picture

I feel a great disturbance in the force .... as if millions of bankers suddenly cried out.

 

MCrosky : Johnny, what can you make outta this? (hands him a Euro)

Johnny : This? Why I could make a hat, or a brooch, a pterodactyl. . .

GerritB's picture

Have you checked the irish referendum site http://www.referendum.ie?

Especially this comment:

Please note that we are currently carrying out testing on the site. Apologies for any disruption caused during this necessary process.
EL INDIO's picture

Somebody knows something

And they are scared shitless !

BlandJoe24's picture

What specifically (forex, treasuries, etc) is likely to happen if the Swiss Franc unpegs from the Euro?

Matt's picture

CHF will go up relative to EUR, I imagine.

Dr. Engali's picture

It's like watching a horror movie where they show the close up of a person's face and you know right behind them is s psycho that's going to take them out as soon as the turn around. The edge of your seat thriller.

brooklynlou's picture

He's behind me, isnt he?

Damn ...

youngman's picture

If I was a Swiss politician...I would high five myself......you have the world paying off your debts.....lol....

brooklynlou's picture

Don't break the Yeager out just yet ... its like a Tsunami wave. Right before it drowns you theres a drawback of the water.

Tsunami Wave's picture

I agree with this statement whole-heartedly +++++++

JeffB's picture

It's also distorting their markets and economy.

They've been lamenting the bubbles it's blowing there, such as a growing housing bubble.

I'm sure they are NOT happy.

gojam's picture

All charts appear to be heading south today.

FieldingMellish's picture

Not all of them. The future is golden (along with those who dig it).

AUD's picture

Anyone following what -26bps means in terms of bond price?

Vincent Vega's picture

It implies zero coupons are trading at a premium.

AUD's picture

What sort of premium are we talking? How far above face value?

Vincent Vega's picture

It depends on the coupon and exact maturity date. But roughly speaking the value of the .05 is about $1.00 on 2 year paper. So 25 bps = $5.00 or 1/2 point (about).

o2sd's picture

<- lookit, a graph

 

 

If by bond price, you mean the zero coupon price (discount rate) and if -26bps (-0.26%) is a continuously compounded spot rate then

ZCB (t(i) )= exp( - t(i)*cc.spot%(i))

 

The bond price should be 1.005214 for a 2Y maturity.

 

I assume bond yields are quoted as continously compounded spot rates. Yes?No?Beuler?

 

sudzee's picture

Slightly negative rates are attractive since the inflow of deposits will drive the franc much much higher. Pitty the SNB having no choice except currency controls or driving their economy into the dust.

semperfi's picture

Is this all going to finally blow up before I'm dead?  Been waiting soooo long now.  Wake me up when it finally does........zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

Overfed's picture

I'm all for putting this off a little longer. I have some property I want to sell and some PMs to buy.

dingoj's picture

Man, if I didn't have my shorts working for me I'd be naked!

orangedrinkandchips's picture

At what point do you just say FUCK IT?

 

and stop chasing your tail?

semperfi's picture

And then there's all these geniuses out there saying that the US dollar is dying/doomed, China making currency swap deals with Japan, Australia, etc, petro-dollar doomed, etc, blah blah blah.  And here and now the US dollar is on a tear kicking the ass of every fucking currency on the planet (except the yen, which is quite queer but I guess is par for the course in the queer times we are in).  Riddle me that batman. 

brooklynlou's picture

Because the Euro is going to implode and all the pieces of paper that Bernak the Magnificent printed are suddenly shooting up in relative value because the dollar will soon be the planet's sole reserve currency again.

I'm getting the sneaking suspicion that the price Gold will rise as a exit valve for people dumping the Euro and looking to store value but once the Euro does die, Gold will tank.

potlatch's picture

People fail to properyl recognize the level of fuckery possible.  it could be the euro is being taken out on purpose.  cuo bono as always. 

 

Merkel has seemed to me, never shocked, just mad or even... depressed.  it was all a temporary con. 

 

 

Was a nice move, making the world think the West was going to divide itself into two competing currencies.....  Honey badger got them now.

 

As to who the "them" is.  Well, who would *not* benefit from new "emergency" doll-o or eur-ar?

Zola's picture

Isnt that the Wet dream of the FED ? Negative interest rates? 

Sandmann's picture

Switzerland used to impose a Bardepot Tax on Deposits which made yield negative. Germany had a Bardepot in the period up to 1974 to hinder capital inflows. It is only in these loop times that people are prepared to subject domestic economies to speculative and random shocks. Extraordinary really. Time to impose Capital Controls generally

Silvertrader's picture

It's a real nice market for a forextrader right now. I am making shitloads of money right now.

semperfi's picture

BRICS DROPPING LIKE A TON OF, WELL, BRICS!!  Ruble -2%, Real -0.5%, Rand -0.5%.  US Dollar back on its way up to 90, perhaps 100 when the Euro explodes in a couple years.  You can take that to the bank.

LawsofPhysics's picture

I agree, well at least provided that the bank in question is still in business by then.

aztec two step's picture

Actually at the moment Bloomberg has 2 year Swiss at negative 45 basis points. And worse yet is the 4 1/2 year point which I assume is an old 5 year which has rolled down the curve. It yields negative 9 basis points.