UBS just sent around an interesting note to clients in which they raise the idea of the SNB potentially adopting quantitative ease. The trouble for the Swiss (if you want to call it that) is that they have a tiny bond market and only a tiny sliver of that tiny bond market trades freely. Most is held by long-term portfolios.
So if the SNB wanted to weaken the franc, they could buy foreign bonds, UBS suggests. US governments and German bunds would be the most likely candidates, we’d guess. If they make that move, look for EUR/CHF to rally.
