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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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Thu, 05/31/2012 - 09:21 | Link to Comment Ted Baker
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Thu, 05/31/2012 - 09:27 | Link to Comment noses
noses's picture

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

Thu, 05/31/2012 - 09:33 | Link to Comment gojam
gojam's picture

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


Thu, 05/31/2012 - 10:00 | Link to Comment TheGardener
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.

Thu, 05/31/2012 - 09:53 | Link to Comment potlatch
potlatch's picture

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

Thu, 05/31/2012 - 09:22 | Link to Comment Tense INDIAN
Tense INDIAN's picture

something has happened or are these low yields indicative of something


Thu, 05/31/2012 - 09:32 | Link to Comment bdc63
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ya think?

Thu, 05/31/2012 - 09:41 | Link to Comment brooklynlou
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. . .

Thu, 05/31/2012 - 09:47 | Link to Comment kralizec
kralizec's picture

Heh, good stuff, that! 

Thu, 05/31/2012 - 09:23 | Link to Comment GerritB
GerritB's picture

Have you checked the irish referendum site

Especially this comment:

Please note that we are currently carrying out testing on the site. Apologies for any disruption caused during this necessary process.
Thu, 05/31/2012 - 09:23 | Link to Comment EL INDIO
EL INDIO's picture

Somebody knows something

And they are scared shitless !

Thu, 05/31/2012 - 10:00 | Link to Comment BlandJoe24
BlandJoe24's picture

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

Thu, 05/31/2012 - 10:16 | Link to Comment Matt
Matt's picture

CHF will go up relative to EUR, I imagine.

Thu, 05/31/2012 - 09:26 | Link to Comment Dr. Engali
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.

Thu, 05/31/2012 - 09:43 | Link to Comment brooklynlou
brooklynlou's picture

He's behind me, isnt he?

Damn ...

Thu, 05/31/2012 - 09:26 | Link to Comment youngman
youngman's picture

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

Thu, 05/31/2012 - 09:46 | Link to Comment brooklynlou
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Don't break the Yeager out just yet ... its like a Tsunami wave. Right before it drowns you theres a drawback of the water.

Thu, 05/31/2012 - 13:49 | Link to Comment Tsunami Wave
Tsunami Wave's picture

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

Thu, 05/31/2012 - 12:06 | Link to Comment JeffB
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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.

Thu, 05/31/2012 - 09:32 | Link to Comment gojam
gojam's picture

All charts appear to be heading south today.

Thu, 05/31/2012 - 09:48 | Link to Comment FieldingMellish
FieldingMellish's picture

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

Thu, 05/31/2012 - 09:38 | Link to Comment AUD
AUD's picture

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

Thu, 05/31/2012 - 09:50 | Link to Comment Vincent Vega
Vincent Vega's picture

It implies zero coupons are trading at a premium.

Thu, 05/31/2012 - 09:52 | Link to Comment AUD
AUD's picture

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

Thu, 05/31/2012 - 09:57 | Link to Comment Vincent Vega
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).

Fri, 06/01/2012 - 00:59 | Link to Comment o2sd
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)*


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?


Thu, 05/31/2012 - 09:47 | Link to Comment sudzee
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.

Thu, 05/31/2012 - 09:50 | Link to Comment semperfi
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

Thu, 05/31/2012 - 11:08 | Link to Comment Overfed
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.

Thu, 05/31/2012 - 09:53 | Link to Comment dingoj
dingoj's picture

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

Thu, 05/31/2012 - 09:56 | Link to Comment orangedrinkandchips
orangedrinkandchips's picture

At what point do you just say FUCK IT?


and stop chasing your tail?

Thu, 05/31/2012 - 09:56 | Link to Comment semperfi
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. 

Thu, 05/31/2012 - 10:10 | Link to Comment brooklynlou
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.

Thu, 05/31/2012 - 11:38 | Link to Comment potlatch
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?

Thu, 05/31/2012 - 10:02 | Link to Comment Zola
Zola's picture

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

Thu, 05/31/2012 - 10:15 | Link to Comment Sandmann
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

Thu, 05/31/2012 - 10:19 | Link to Comment Silvertrader
Silvertrader's picture

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

Thu, 05/31/2012 - 10:23 | Link to Comment semperfi
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.

Thu, 05/31/2012 - 10:55 | Link to Comment LawsofPhysics
LawsofPhysics's picture

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

Thu, 05/31/2012 - 15:34 | Link to Comment aztec two step
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.

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