SGM-FX insights

Dire Straits A handy ready reckoner for the major straits of the world that see 70% of the global oil trade pass through them: Malacca, Bass, Singapore, Gibraltar, Magellan, Hormuz, Bering, and Bosphorus. It may not add much knowledge to those who have a good grasp of economic geography but it does serve to remind one following the […]

Evens That is the bookies’ betting on PM Starmer being gone by the end of June following the UK Council Elections, which were even worse than had been expected for the Government. Whether that does indeed happen, equity prices are set for greater volatility, gilt yields, and therefore interest rates will likely remain at their […]

UK Local Elections As you read this, the polls will be giving strong indications and pundits will have made themselves hoarse in parsing the results of what has been billed as a seismic set of local elections. With polling closing at 2200hrs last night, while some results are coming in first thing today, most will […]

One pager Yesterday, a relief rally was underway covering virtually every corner of the market. Bonds rallied, equities rose and within FX the winners and losers were defined by a reversal of the trends that had previously emerged each time the Iranian conflict reared its head. The catalyst for the relief rally were headlines from […]

British Pound Buffeted but at present largely unaffected by the political turbulence building in advance of Thursday’s UK local elections, increased tensions in the Middle East and its fragile economic position, Sterling is remarkably unmoved. The explanation lies in the shift in expectations for UK interest rates from cuts to increases which has buttressed the […]

Long weekend For the UK, it was a long weekend in the sense that it brought with it the Early May Bank Holiday. For markets, it was a long weekend for a whole different reason. With most of the rest of the world not observing a bank holiday yesterday, market liquidity remained sufficient with few […]

Brent Oil With oil breaking USD 126 yesterday morning on the back of failed arrangements for peace talks and the likelihood of a resumption of US-Iranian hostilities, the news that the UAE are withdrawing from both OPEC and OPEC+ citing the protection of their own interests might have been expected in more normal times to […]

Delayed fuse Last night’s Federal Reserve decision held all the potential requirements for a momentous occasion. Markets had been ascribing a high value to the event with options pricing suggesting the decision posed a significant risk towards exposed assets. Ultimately, the potential swan song publication of Chair Jay Powell passed without incident. Claims from some […]

German Gold With 3350 tonnes in the vaults and the 2nd largest gold reserve in the world after the USA, Germany has EUR 440 billion worth of moolah tied up in that asset class. Some people both inside and outside Germany are saying it might be time to spend some of it. The Bundesbank is naturally […]

Sterling defence Options markets are flashing warning signals for Sterling. It’s no secret that the forthcoming Bank of England monetary policy decision later this week poses a risk for the Pound. However, there are risks mounting further afield. The local elections on May 7th are a material risk for GBP, for example, with traders concerned the […]

European Central Bank Tonight in Berlin, President Lagarde of the ECB will make a speech to the Association of German Banks at their 75th Anniversary meeting. This will be a well-attended and closely followed address since Thursday this week is the ECB meeting, and the Council is confronting much higher inflation and a markedly slowing economy. […]

US Dollar The Maurits C. Boas Professor at Harvard University who is better known as the former IMF economist Ken Rogoff has broken cover about the USD: he is predicting that the Chinese Yuan will be a Reserve Currency within 5 years and the USD will decline between 15-20%, which would take EUR/USD to 1.40 predicated […]