COMMENT: Zurich’s debt-fueled dance could trigger Vontobel-style breakups

After more than a century, Vontobel and Zurich are ending their relationship. The private bank will establish its headquarters in the tax-friendly town of Baar, leaving only a customer center on the banks of the Limmat. Tradition is giving way to a consolation prize and a sense of decline.

The argument over what the move means has already begun. Zurich’s city government is downplaying the decision and repeatedly insisting that Switzerland’s largest city remains an attractive business location. Critics are focusing instead on the high corporate tax rates under the city’s left-green government. Is Vontobel only the beginning? Should Zurich reduce some of the highest company taxes in Switzerland? The answer, the commentary says, is yes, but it will not happen.

The piece then turns to the wider debt problem. At a breakfast during the World Economic Forum in Davos in January 2025, a banker from one of Wall Street’s most powerful institutions said Donald Trump did not frighten him. “The bond market will stop him,” the banker said.

At first, the market did restrain Trump. When he pushed his tariff policy too aggressively, turmoil in the government bond market forced him to retreat from the cycle he could set in motion. Falling bond prices mean rising yields and higher interest costs for the US government’s crushing debt burden.

Now, the commentary says, the market no longer restrains the United States but is taking revenge. Trump’s policies, especially what the article calls his Iran adventure, have shaken global confidence in the country and pushed US debt above $40 trillion. Some states have even begun withdrawing their gold reserves from New York.

The “F-word,” financial crisis, is suddenly circulating. The former chief economist of the International Monetary Fund has warned that such a crisis could overshadow everything seen before. Investors are also worried about the AI bubble and the debt burdens of countries including Japan and France. Governments around the world are concerned about their room for action, with Switzerland presented as the exception.

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The bond market will stop him.