What if Swiss deflation drags the SNB back to negative rates?
The SNB returning below zero with FX intervention against deflation pins front-end yields and distorts global safe-asset and funding markets: it weakens CHF at the margin, eases global conditions and bids long-duration risk. Rhymes with the 2015-2022 SNB negative-rate era that made the franc a funding currency and compressed European real yields. Forward: a fresh return to NIRP signals how stuck disinflation is in core Europe — bullish duration, bearish the franc on carry.
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The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 1–3 years horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-on shock. Swiss deflation pushes the SNB back below zero with FX intervention, distorting global safe-asset and funding markets. The trigger decomposes into signed root‑shocks — Fed policy path ▼ · Financial conditions ▲ — which propagate through our causal graph to the markets below.