Swiss 2Y Rates Plunge To -43bps As All Trust Is Lost

Tyler Durden's picture

A near-record single-day plunge in rates for Switzerland's 2Y interest rate has driven it to a spectacular -43.1bps this morning. The German 2Y also has cracked to record low interest rates at -5.2bps. With Gold big over $1585 also, it seems the safety trade - or escape from risk as JPM exposes the reality of the world in which we live - is dramatically on.


Chart: Bloomberg

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swissaustrian's picture

Gold in CHF is just 7% below all time highs...

swissaustrian's picture

Many Swiss real estate funds are trading with a premium of 20-30% over NAV. That's where a lot of the hot money is going, too.

ReactionToClosedMinds's picture

too long to comment on analytically but this is true from what I've seen  >>>> "Many Swiss real estate funds are trading with a premium of 20-30% over NAV".

Read into it what you will    ....

Gunga's picture

Will we see the gargantuan paper positions run for the tiny lifeboat that is physical gold ? If just a small percentage of the false paper promises are traded for physical gold the gold price could go parabolic. Assuming anyone is willing to take paper for gold in enough quantity to make a market. The notional value of all of these paper contracts is so large to say they dwarf the physical gold market is an understatement.

disabledvet's picture

gold? if this isn't the greatest debt bubble in history i don't know what is. these algo's are not obviously traded to "make sense." no human would put their money in "deposits" that are obviously nothing more than massive speculations for reasons not even Gary Fisher could fathom.

Gunga's picture

It seems logical that a percentage of the massive speculations that you refer to would move to one of the few assets available that has no counterparty risk.
I'm not trying to be argumentative , but I don't understand the point you want to make with your reply to my post.

ZippyBananaPants's picture

Warren Buffett is a tool

Flakmeister's picture

What other countries have a realistic chance of going NIRP?



cowdiddly's picture

I think it was the Netherlands the other day first to go Nirp. now the Swiss. Us is now down to <1.5%  and falling on the 10yr. Its called a depression where the velocity of money grinds t a halt and cash becomes King. Its the road out of that mess and large scale intervention where you really get hurt the most monetarily.The people who do nothing and leave their cash in a bank will lose the most. Its time to make your move folks or you can keep trusting the banks and the financial system and do nothing to protect yourself. The choice is yours but you are going to get to live with that decision for a long while.

Every day a new banking scandal/swindle emerges- How many Lehman brothers moments does it take to realize the giant fraud is coming apart.

Whatta's picture

-43bps...that is just nutty! The New Normal? Guaranteed losses?

JackT's picture

Yes, losses are guaranteed..but to keep things interesting they never tell you how much. 

swissaustrian's picture

I guess the people buying are foreigners who are speculating that their gains in fx terms will be larger than the interest losses once the SNB isn't able to hold the CHF down.

ReactionToClosedMinds's picture

that has to be a leading candidate as explanation for the motivation .....

90% of humanity .... probably more ... cannot see what is going on ...... delveraging, deflation (with resulting attempted antidote "reflation") .....

combine this with things that have never before happened to humanity .... masive technology changing behavior and productivity but masking the debilitation of classic 'values', collapse of major idiotic ideology (communism) throwing one-third of humantiy onto global workforce which there is a semi-idiotic brother/sister ideology in socialism (flip side of 'equality' coin is 'entitlement' mindset) ...... massive oversupply of global liquidity due to reflationary efforts spurting around distoring assett class values ..... central banks gloablly cooordinating practives/methods whihc are band-aids not really treating cuases but just buying time.

not to be a gloomy gus .... but the beginning of 'hope' is when enough see & understand why & how we got here ... but this is still so subject to current 'political' debate and media distortion ..... so there practically is no hope until something almost cataclysmic happens ... then even the Jim Jones kool-aid purveyors will be shown to be emperors without cloths   (see Paul Krugman  & acolytes ).

Go read Thuclydides Peleponnesian War ..... it all happened 2,500 years ago ..... 'democracy' runs amok as demagogues 'promise' more to the demos masses and cannot deliver because they are unrealistic raising expectations of entitlement while power elites hostile to democracy (the Athenian threat - how did an average Greek city-state emerge so rapidly and prominently to dominate the Mediterranean? ---- by harnessing the economic motivations of the middle class into the success of the city ... the merchant-based Athenian Navy) )  as it is a threat, undermine it, the 'revolutionary' ideological  bloodletting which Thuclydides jimself was the beyond imagination killing brother .... no quarter, extermination versus traditional battles for power.

Then read Joseph Schumpeter Democracy, Socialism & Capitalism ... who frames in the modern era why capitalism cannot survive because of the too tempting allure of 'socialism' as it gradually eviscerates 'democracy'.  I give up my freedom for the false security of the 'state' seeing after my 'rights' and 'needs'.  Ther just is too much self-interest to overcome, especially when business folk fall for the narcisstic trap of 'intellectual' approval via 'socialistic' approval and acceptance or, more balatantly, CHicago-way corruption & crony capitalism.

NaiLib's picture

"all" trust lost? Looking at stockmarkets there is a lot of trust left to lose. I dont understand why the Germans do not take advantage of the situation and borrow as much as they can at the moment. Then they should leave the Euro and all their debt would be devalued and they could go on a never seen buyuing spree for what they borrowed.


That would be true capitalism

genr8n's picture

I'll give you $200M today if you promise to give me back $199M tomorrow. Or if it all turns to poo, I'll sell my Swiss Notes at a profit.  Win-Win.

laomei's picture

Ok, here's a thing that I don't quite understand.

If you are buying bonds that pay a NEGATIVE rate, why the hell wouldn't you just hold cash at that point?

swissaustrian's picture

You can't rehypothicate cash.

cowdiddly's picture

Because the fiat money will seek its true value- $0 The loss might be less. Thats the all knowing Uncle Sugar trying to blow the smoke up you ass telling you that your money will be safer if you give it to us and we will make sure it is at least worth something afterwards because the gov't will still be here and we will only charge you a small price to keep most of the value of your money intact after this is over: For a small fee of course.In the Netherlands and the Swiss case it just saying, don't bring your drachma and Pesetas over here and drive the price of our money up and fuck up our export gig, we like our money cheap where we can keep skimming the trade.Buy yourself some PMs while you still can my friend. I don't think it will be much longer before it will be hard to get. In volume, Im afraid it has already become so. Capiche.

laomei's picture

I live in China. I can walk into any bank and buy gold and silver.  Hell, I'm sitting on 2kg of gold and 100kg of silver as it is.  Physical, not paper.  I feel fairly ok with my position.

GERxit's picture

they sold most of their gold, so currency is not anymore 40% gold backed like in the 90s, they print like hell to keep 1.20 and they have to major banks which they have to bail out (again) in the next global financial meltdown.

bravo! switzerland is really the place to be if you want to feel safe... best regards to pavlov

Snakeeyes's picture

Switzerland, Germany and Netherlands all have negative NOMINAL 2 year yields. US has REAL 2 year yield of -1.75%!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Bill Shockley's picture

The trust in guns and gold has not fallen.


The return has for the moment.


How do you sleep?


Keep it simple you greedy fucks.


Stop looking for the return.


It was never about that in my family, in the tribe, for socialists.

In a universal way things are perfect, self correcting and in balance.


Better look for the balance point.


In every situation there is only one correct action.