SWAP Rate Monitor Switzerland | May 18, 2026 | How the Iran War and US Inflation Drove the Swap Curve Upward

The Movement in the Data: Three Phases

Phase 1: Stable Level at the End of April (April 25 – May 1)

Until the end of April, swap rates remained at a constant level. On April 25, 2Y stood at 0.18%, 5Y at 0.35%, and 10Y at 0.61%. This stability was deceptive: in the background, the fragile ceasefire between the US/Israel and Iran was already underway, and the Strait of Hormuz was largely blocked.

Phase 2: Short-term Decline – the “Hope Window” (May 2 – 7)

From May 2, rates dropped noticeably. On the morning of May 7, they reached their low: 2Y at 0.15%, 5Y at 0.32%, 10Y at 0.58%. The cause was directly political: on May 6, President Trump announced he was pausing the US operation to escort merchant ships through the Strait of Hormuz to allow space for a possible agreement with Iran. The markets interpreted this as a signal of relaxation – swap rates fell. (Source: NPR)

Phase 3: Sharp Increase after US CPI (May 12 – 18)

On the morning of May 12, at 8:20 am, the rates jumped abruptly: 2Y from 0.18% to 0.21%, 10Y from 0.60% to 0.64% – within a single trading period. The trigger: US inflation data released shortly before. The American consumer price index rose to 3.8% year-over-year in April 2026 – the highest level since May 2023 – exceeding expectations. Energy prices were up 17.9% and responsible for over 40% of the monthly increase. (Source: CNBC)

From May 15, the rise accelerated further. On May 16, the largest daily jump of the whole period took place: the 2Y rate rose from 0.25% to 0.28%, the 5Y from 0.49% to 0.53%, the 10Y from 0.69% to 0.73%.

Overview of Swap Rate Development

Source: hypothek.ch Rate Monitor, FactSet
Disclaimer: the data as of May 18 are intraday data and change every 30 seconds.

What’s Behind It?

Iran War and the Strait of Hormuz

Since February 28, 2026, the consequences of the US-Israeli air war against Iran have been blocking the Strait of Hormuz, through which about 20% of global seaborne oil trade previously flowed. The situation remains extremely unstable: while a ceasefire is formally in place, the Iranian foreign minister described it as “very shaky” and said that a lack of trust toward Washington was “the greatest obstacle to a diplomatic solution.” (Source: Wikipedia, CBS News)

Brent crude oil rose to around 118 dollars per barrel by the end of April. This compares to about 70 dollars before the war began and is still above 109 dollars (May 15, 2026). This energy price shock is the real driver of global inflation dynamics, also pushing CHF swaps up. (Source: CNBC)

US Inflation as Direct Trigger

EY expects US inflation could rise above 4% in May 2026, while core inflation is approaching the 3% mark. As a result, traders raised the probability of a Federal Reserve rate hike by the end of the year to about 30%. A more hawkish Fed outlook moves swap curves up worldwide – including in Switzerland. (Source: EY)

SNB and Swiss Franc

Swiss inflation rose to 0.6% in April – the highest level in 16 months – driven by rising energy costs. At the same time, the SNB signaled an increased willingness to intervene in the currency market to prevent excessive franc appreciation. The next SNB interest rate decision will take place on June 19, 2026. A change in the key interest rate is unlikely – LUKB forecasts that the SNB will keep the key rate at 0% over the next 12 months, but that swap rates could continue to rise moderately.

What Does This Mean for Your Mortgage?

Fixed-rate mortgages: Anyone taking out a 10-year fixed-rate mortgage today pays around 13–15 basis points more than at the low on May 7. For a CHF 800,000 mortgage volume, this means approx. CHF 1,040–1,200 more per year.

SARON mortgages: The SARON remains at –0.05% and is not affected by this movement in the short term. Those with variable-rate financing will only notice the increase when the SNB itself raises the key rate. Most economists currently expect this earliest in 2027.

Timing question: The experience of the past three weeks shows: short-term relaxation signals can quickly push swaps down, but geopolitical setbacks bring the rise back even faster. Those waiting for the “perfect window” risk missing it.

Outlook

Economists assume that even with a rapid diplomatic solution, it will still take two to four months before energy supply chains normalize. In a more pessimistic scenario, even six to nine months. As long as the Strait of Hormuz is not reliably open and US inflation remains above 3%, upward pressure on the CHF swap curve is likely to persist. (Source: CNBC)

The next important data point comes on June 10, 2026: then the US Bureau of Labor Statistics will publish the CPI data for May. This figure is again expected to directly impact swap rates. And thus on fixed mortgage rates in Switzerland.

Knowledge: what are CHF swap rates?

Find out in this article on hypothek.ch more about what swap rates are and how they define the Swiss mortgage market.

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