The fact that there is a differential in forward interest rates is an indicator that the market believes USD will continue to depreciate against CHF. Otherwise it would be possible to borrow in CHF and invest in USD and make a profit.
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Aha, itâs not about spot. Always interesting to learn, thx.
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3 posts were merged into an existing topic: US Treasuries attractive?
I am following this guy with his sentiment indicators and find it very interesting.
https://seekingalpha.com/article/4608357-a-new-bull-market-or-big-double-top
Normal, with all the AI frenzy, itâs only tech that has been outperforming the last 60 days.
But what does it tell you about the future? Nothing, as your guess is as good as anyoneâs.
"It is difficult to make predictions, especially about the future." 
On Friday VIX had felt to the levels last seen on February 14th, 2020. Donât know what to think about it. On the one hand, it might show a significant level of carelessness from the market participants, that might lead to a decline of prices if they got spooked by something. On the other hand, VIX shows an implied volatility of 30-day options (or something like this), and I had read that there are now many more options expiration dates available and people use much shorter term options for hedging than it used to be, therefore current pricing of 30-days options and the corresponding implied volatility levels shown by VIX are not really comparable with the historical data.
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FYI thatâs the main reason why thereâs a VIX1 index now.
So inflation in the US went down from 4.9% to 4.0% in May 2023. It seems that the path is clear? Also for Switzerland which is close to getting in the desired 0-2% range. The increase next week by the SNB will probably do the final trick.
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There might be a small uptick in YoY inflation over the next few months, especially with the widespread rent increases. I donât expect consistent <2% YoY inflation before February 2024, possibly even quite a bit later.
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US core inflation only went down from 5.5% to 5.3% though. Still quite far from the 2% mark.
US core inflation is below the FED rate. Meaning that unless there are any supply shocks, inflation should stabilize and come down. In Switzerland, we are still in a reverse situation and Europe is in a very difficult stage. Long story short - good outlook for the US Inflation, still negative outlook on EUR Inflation and we may be somewhere stuck in the middle at about 2.5 to 3% for another 18 months until our inflation comes down again.
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With the effective fed funds rate at 5.08% and core inflation at 5.3 . . . the short term real rates are still in negative territory.
Swiss inflation doesnât yet show the rental increases coming due this fall. I got my letter yesterday, +5%⊠so for the foreseeable future, Swiss short term real rates are also negative.
And thatâs before talking about the Eurozone, where inflation has been in the high single to mid double digits (8-22%) recently.
It will take a long time here to actually reach positive real rates, and I donât think weâve even began to see anything reprice for that.
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Huh? Is that a real thing? Canât recall.
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And sometimes you close your eyes
And see the place where you used to live
When you were young
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care to elaborate a bit more?
tldr;
Bottom of the dip? Not in Germany, it looks like all-time high:
They can fool themselves as much as they want. In CHF terms, which is much closer to the inflation adjusted numbers than the number in EUR, current DAX level is 8.1% below the ATH in August 2021. (TradingView).
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With the rapid decline of inflation experienced, (having more than halved from about 12% to below 6%, and it looks more pronounced if you zoom out a little) I doubt there was a shortage of people to whom the path seemed very clear at the end of 1976.