Switzerland: Bond Yield Rebounds From One-Month Low.

Switzerland's 10-year government bond yield rose above 0.4%, rebounding from a one-month low, as uncertainty surrounding the Middle East conflict remained elevated while domestic inflation pressures eased. Tougher demands from Washington toward Iran clouded prospects of a peace agreement, pushing oil prices higher. However, Swiss inflation eased to 0.4% in July from 0.5%, its lowest level in four months, highlighting the limited pass-through from higher energy prices linked to geopolitical tensions. The reading contrasted with the Swiss National Bank's expectation of a modest near-term pickup in inflation, following its decision to hold its policy rate at 0%. The SNB is expected to leave borrowing costs unchanged throughout the year, with further cuts remaining a contingency rather than the base case, citing no severe damage to Swiss banks. While most economists see the first SNB rate hike in early 2028, currency markets continue to price in an increase as early as March 2027.