The Swiss franc only weakened again recently with the prospect of a COVID-19 vaccine and hopes of a faster recovery of the global economy. On a trade-weighted basis, the Swiss franc is almost 1.5% stronger in nominal terms than at the end of June (cf. chart 3). It thus remains highly valued. As reported in our interim results, we carried out foreign exchange market interventions totalling CHF 90 billion in the first half of this year. On a trade-weighted basis, the Swiss franc has strengthened some 5% in real terms since the beginning of 2020. Had we not intervened, the franc would have appreciated significantly more, and this would have placed an additional burden on our economy in an already exceptionally challenging environment. Page 2/5  Zurich, 17 December 2020 Andréa M. Maechler  News conference  Final sprint in transition to SARON  Let me now say a few words about the changeover from Swiss franc Libor to SARON. The end of Swiss franc Libor is fast approaching. In November, the Libor administrator launched a consultation procedure on the discontinuation of Swiss franc Libor as per end-2021. Market participants in Switzerland may therefore only have around 12 months to complete the necessary work for a smooth transition to SARON. Only the heavily used tenors of US Libor are expected to be granted an extension until mid-2023. However, this will not affect the Swiss franc Libor I have been focusing on in my remarks.
Moreover, market participants interpreted the Fed’s revision of its monetary policy strategy as an indication that the Fed will continue pursuing an expansionary monetary policy for an extended period. This, along with expectations of a major fiscal stimulus package, supported investor risk sentiment and caused inflation expectations in the US to rise. What is more, in Europe, the agreement reached in July on the creation of an EU recovery fund led to a further decline in risk premia on sovereign bonds. Page 1/5  Zurich, 17 December 2020 Andréa M. Maechler  News conference  Overall, risk markets were able to benefit for considerable periods of time, despite the volatile market environment. There was some divergence between the US and Europe, however: While the leading US equity index, the S&P500, hit a new record high as early as the beginning of September driven by technology stocks, price developments on the major European stock markets were more moderate. Thanks to the rally in November, all major indices are up on mid-year. According to the latest reading, Switzerland’s SMI is up around 3% (cf. chart 1). On the interest rate markets, yields on long-term government bonds continued to reflect expectations of an ongoing low interest rate environment. Although yields on US Treasuries did trend upwards slightly overall in the second half of the year, 10-year US Treasuries continued to trade at historically low levels – around 0.9% according to the latest figures – following the marked drop in interest rates at the beginning of the year.