22nd November 2016
-Gestion de fonds, IAM
Erika Mesmer, Client Relationship Manager
This figure caught my eye on Friday, while I was looking at some figures about the markets. +50% was the increase in 10 years Swiss Confederation Bond Yield from Thursday to Friday. Of course, when looking at figures close to zero, changes from -0.10% to -0.05% in absolute terms very small, are in relative huge. But only the fact that we today can say “the Swiss Bonds yield is about zero” was unimaginable only a few weeks ago. In July 2016 the yield was still -0.60%.
This upwards move of the bond yield impacts the performance of this asset class. Looking at the SBI AAA-BBB Index, which covers Swiss Investment Grade Bonds, we observe following development: Since the beginning of the year until end of September the Index rose by +3.7%, since beginning of October until November 18th, it fell by -2.5%.
We all would want to know how this will continue and if we are currently observing the turning point for bond yields or not. But one thing is certain: if yields rise, performances of bonds will fall.