SGM-FX insights

Where will further volatility come from? We have once again entered into a period characterised by data-driven market moves. Markets until only recently seemed comfortable with how future dated contracts had been priced. This was true of most assets from FX forwards, volatility indices including the VIX, equities and treasuries. Despite most developed economies having […]

US Equity Markets With the US S&P Index up 13% half way through the year, statisticians have been out over the weekend and have pronounced that there should be further positive news in H2 2023. In the 22 instances that the S&P has managed 10%+ gains in HI since 1950, the median gain for H2 […]

Federal Reserve Chairman Powell yesterday spoke at the Bank of Spain conference on financial stability in Madrid and set out what sager minds had been expecting: US interest rates will need to rise two or more times before the end of 2023. There are 4 more FOMC meetings this year, the next being July 25/26. […]

Antipodean weakness  Many of the currencies that would have in years gone by been described as high beta, high yielding currencies, are now carving the way for monetary normalisation. The weakness seen in the Kiwi and Aussie Dollars since the start of the year is further emphasising the changing role of AUD and NZD within […]

UK Food Inflation Such is the state of affairs regarding UK inflation that the news that annual food inflation has fallen from 15.4% in May to 14.6% in June was greeted with enthusiasm. Food has taken up the baton from energy when it comes to eye watering levels of UK inflation and despite reassuring words […]

Slim ranges  The theme we noted yesterday continued strong in markets with the weekend’s events failing to have a meaningful impact upon markets. Tight trading ranges prevailed within most markets with measures of volatility failing to breakout higher. Spreads on options remained tight at least within the FX space as implied volatility continued to fall. […]

Russia and the Markets Distilling the uncertainties around what is really happening and what might happen following the events in Rostov on Don and other areas as close as 200km to Moscow over the weekend is a mug’s game. Interesting to see how little markets have moved in anticipation of the market opening a few […]

UK Interest Rates At 5% UK rates are at the highest level since 2008. While market expectations were still mostly for a rise of 25bps, yesterday morning ahead of the announcement there was a rising chorus calling for 50bps led by the Financial Times. In the event the voting was 7-2 for 50bps and the 2 were […]

Central banks in the driving seat  Following testimony from Jay Powell that dominated trading yesterday afternoon, attention will today once again shift to the Bank of England. The BoE has been in the spotlight as UK inflation data continues to trend above similar statistics being released in other developed economies. Yesterday, the most recent reading […]

Oil WTI Nymex oil was down $1.53 from Friday’s close yesterday at $70.25 despite China cutting two benchmark lending rates by 10bps each for the first time in 10 months. No improvement in demand is discernible and oil traders are looking for signs of a sustained increase in Chinese demand-forecasts suggest an increase in that […]

Global demand  There are very few outliers to the global inflation and monetary adjustment phase that we are currently enduring. The variation between nations is largely limited to what phase of the adjustment they are in. The spectrum ranges from the ECB or BoE’s catch-up meeting-by-meeting hikes, to the Fed’s let’s take a break, all […]

Sterling and the Bank of England On Wednesday the BoE Monetary Policy Committee will, having braced itself for the release of the latest cost of living figures, have to vote on a change in UK interest rates. Most observers believe that the split in the committee will be a sizeable majority for a rise of […]