Investors flee to Swiss francs

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The turmoil in the US banking sector is sending shock waves to financial markets around the world. According to traders and analysts, this is once again triggering a flight to safe havens. First of all, government bonds such as Swiss francs, Japanese yen, Confederates and precious metal gold are sought.

“We’re seeing markets react in a classic way to large amounts of uncertainty,” an FX analyst told AWP. Franconia once again deserves its reputation as a safe haven. “Market participants have been reminded of the events of the 2008 financial crisis and are very concerned about the potential spillover effects,” said another trader.

Bonds are also less lucrative

Things have changed radically since the end of last week, as Frank has tended to weaken against the euro and dollar in recent weeks due to different interest rate expectations from central banks. On the reporting day, the euro fell to CHF 0.9764 against the Swiss franc, and the common currency even fell to CHF 0.9714, the lowest level since mid-November. Last week, the euro was about a cent more expensive.

The exchange rate development for the dollar is similar. This is currently quoted at CHF 0.9151. On Friday, the greenback was still trading well above CHF 0.92.

Yields on bonds from the Swiss Confederation and other debtors considered reliable are also falling. Ten-year Confederates and German government bonds are yielding about 20 basis points less on Monday than on Friday. On the other hand, stock markets are under pressure.

Falling rate hike expectations

The Fed announced drastic measures to calm market concerns. Over the weekend, the Ministry of Finance, the central bank and deposit insurance agency, the troubled bank SVB and another institute said they would protect deposits. The Fed has launched a new lending program to provide liquidity to banks.

However, this situation has also increased the expectations that the Fed can now take its foot off the monetary policy brake pedal due to the turmoil in the American banking sector. A trader said that while the market expected the Fed to raise interest rates by 50 basis points at its next meeting in a little over a week, now expectations have dropped to just 25 basis points. Influential US bank Goldman Sachs does not expect any further rate hikes. (SDA/smt)

Source :Blick