The #SNB left its policy rate at 0% as expected. Most importantly, it didnt change the endpoint of its inflation #projection, indicating that policy is sufficiently #expansionary already to stimulate the economy and to deliver the desireed inflation rate in medium term.
#Swiss #inflation remains at 0.2% yoy - slightly below expectations. Details are ok. Domestic inflation is stable at 0.6% yoy indicating that there are no deflationary processes. Imported inflation is negative but far above levels in 2015 and 2020. No reason for #negative #rates!
The #SNB reports CHF 5.06 bl #FX interventions for Q2 - the first quarter it purchased FX since 1Q22. Most likely it tried to smooth FX volatility after Trump announced reciprocal tariffs. Yesterday the SNB and the US treasury agreed to rule out competitive FX devaluations
(2/2) …..insights into the economic discussion and the #evaluation of economic arguments in a way that would not fit naturally in its #Quarterly Bulletin. They will contribute to a better understanding of the SNB‘s decisions by market participants.
www.snb.ch/en/publicati...
SNB President #Schlegel has just announced that the SNB will start publishing #minutes four weeks after their quarterly policy decisions. I welcome the decision as a step of the SNB to communicate more openly with financial markets and the broader #public. Minutes help to provide deeper (1/2)
#Consumer #inflation expectations as surveyed by the #ECB are picking up for the next 12 months and 3 years. Unclear whether that is trade war related or not. No reason to panic but also no reason to cut policy rates by 50bp next time. Several cuts by 25bp if needed are safer.
#SNB cuts policy rate by 25bp as expected. Importantly, it argues that the cut ensures that monetary policy remains #APPROPRIATE given low inflationary pressure. It also increased the inflation projection to 0.8% for Q3 &Q4 2027. Both indicate that no rate cut is likely in June.
Goods news from Eurostat: Final February #inflation revised down to 2.3% from 2.4% and most importantly services inflation falls to 3.7%. In line with that also labour cost growth declined to 3.7% for 4Q24 from 4.5% in Q3. It really seems that we are on the right path
Die Zollpolitik fördert hauptsächlich die US Inflation. In der Schweiz kommt es darauf an wie stark der Franken sich in Reaktion auf höhere Zölle abschwächt. Aber selbst dann würde eine SNB Zinssenkung helfen, die geringere Exportnachfrage durch niedrigere Zinsen gesamtwirtschaftlich abzumildern.
We expect the # SNB to cut its policy rate by 25bp on Thursday in order to anchor inflation expectations at a higher level and as higher long rates tighten financial conditions. Markets price a 73% probability for a cut.
More details in our preview:
publications.jsafrasarasin.com/publ-dl-ch/d...
Another stimulating #ecbwatcher conference. Also feels like a class reunion again
#Swiss #inflation in January came in as expected: -0.1% mom and +0.4% yoy. Falling electricity prices were the main factor for the declining price level. The data supports our view that another rate #SNB cut by 25bp would be justified in March.
Golf of what again? #Google Maps is reacting very fast…
#ECB estimates of the #neutral policy rate of 1.75-2.25% confirm market expecations and don't stay in the way of our forecast of further 100bp rate cuts. Yet, they come with so many caveats (model/parameter uncertainty, misspecification) that one feels almost encouraged not to use them.
#SNB cut its policy rate by 50bp as we expected. Thereby, its new chairman, #Schlegel, shows that he is as determined to fight too low inflation as his predecessor. The new inflation forecast is below the previous one for 2025 but a bit higher for 2026. Notably no forward guidance was given.
Lenzspitze (4293m, middle) and Dom (4545m, left). Längfluh restaurant and Fee glacier below. While not the best conditions for skiing these days, the views are still spectacular.
@Saas-Fee
Is the marginal buyer of #gold #Chinese now?
Until the #Ukraine war and the freezing of #Russian assets the gold price was mainly a function of US #yields. Since then the correlation broke down completely. Now gold seems to be rather #correlated with Chinese #bond yields.
We have just revised our #SNB call and now expect a cut by #50bp in #December, followed by two 25bp cuts in to a level of 0% in June. #Inflation simply is too low and the economy is growing below potential such that an expansionary policy is needed
publications.jsafrasarasin.com/publ-dl-ch/d...
#Swiss #Inflation remained weak in November matching consensus expectations of 0.7% yoy. (core 0.9% yoy /CPI ex rent 0.1% yoy). This confirms that the inflationary pressure is very weak and that the #SNB shouldn't hesitate to cut ist policy rate decisively in the coming quarters.
The #mortgage #reference rate remained unchanged in Q4. Still #lending rates are falling further in #Switzerland. Now it is all but certain that the reference rate will be cut in March such that rents can be adjusted down in August. Our inflation forecast remains at 0.4% for 2025
#Swiss GDP in Q3 remains remarkably stable w 0.4%qoq & 0.2% qoq sport-event adjusted, considering the weak international environment. Strong #private consumption partly compensated falling goods exports. Only #investment spending is worrying as it fell in 5 out of last 6 quarters
It is not all falling apart in the #euro area: At least, not yet. #Economic #Sentiment in November improved in the #retail and industrial sectors. #Price components increased as well in most sectors. Possibly rising real incomes stabilize it by increasing household spending.
As always very interesting interview with @isabelschnabel.bsky.social even though this time clearly too hawkish in my view.
www.ecb.europa.eu/press/inter/...
....also limits their sensitivity to tariffs.
Further details in our #Cross-Asset Weekly:
publications.jsafrasarasin.com/publ-dl-ch/d...
Three reasons for US-small caps:
1) High #rates hurt small caps less than in the past as they are no more #leveraged than the S&P median stock.
2) Due to higher domestic earnings lower corporate #taxes benefit small more than large caps as the 2017 tax cuts showed.
3) The smaller foreign exposure
Hello Bluesky! Travelling back from the #SNB #watcher conference might be a good opportunity for my #first tweet here. The conference didn’t change my expectation that we see 3 25bp #cuts down to a 0.25% policy rate by June. Yet I found it remarkable how much the SNB talked down market expectations.