SGM-FX insights

Inflation now, (no) growth later When you tame inflation by using monetary policy you are influencing the demand function within an economy. By tightening monetary policy, you can by definition only constrict the available capital within an economy and therefore attempt to reduce demand and spending. There is no expected constructive supply side adjustment to […]

British Pound In itself not really a story but when a Member of the Bank of England’s Monetary Policy Committee opines on the UK currency, the market reacts. Yesterday it was the statement that if investors had not fully priced in the likelihood of further interest rate rises from both the Federal Reserve and the […]

New Governor in town The Japanese Yen has attracted a lot of economic commentary over the past few months. The Yen had been losing significant ground on markets as the Bank of Japan clung to ultra-loose monetary policy. Even in an environment of rising global inflation, the central bank kept rates low and kept the […]

US Employment Fasten your seatbelts for a big week on the US jobs front. After 517,000 new jobs were created in January, the expectation is for February to reflect growth in jobs but much less-200,000 in fact. At present US unemployment is at its lowest level since 1969 so the argument that the Federal Reserve […]

US Treasury Bonds With the 10 Year now back over 4 at 4.07% and the 2 Year at 4.90%, the market has in the past week or so moved dramatically and is now anticipating the Federal Reserve to err on the side of caution and do what it has in fact been saying for the […]

Deciding not to decide Just because there isn’t a rate decision in the UK due for some three weeks yet hasn’t stopped interest rates having a decisive impact upon Sterling crosses in the FX market. In fact, the weeks between monetary policy decisions present opportunities for many policy makers to give speeches or publications where […]

Inflation Following on from Friday’s US inflation release which came as an unwelcome surprise to markets, there was further evidence of stubborn inflation data releases in both France and Spain yesterday. All this adds up to implied  peak policy rates rising by 0.5% in February, the US to 5.4% and Europe to 3.9%. That compares […]

New chapter or (emperor’s) new clothes? The UK and EU yesterday announced a new trading arrangement with respect to Northern Ireland that they believe marks a new phase in political economic relations between the two parties. However, there remains doubt over whether the breakthrough is substantive enough to materially change the UK and EU’s trading […]

King Dollar Tired if not exhausted USD bears have begun to stir once again. The narrative is that with US interest rates having peaked and USD having enjoyed a long period of strength against all currencies including and especially Emerging Market Currencies, the USD’s time is up and the USD is now in long term […]

Oil Price Influences With NYMEX WTI trading at a lowly USD 74.75, it is a good opportunity to examine what is driving the oil price. In no particular order, in the overall climate of rising interest rates, US inventories increased by 9.9 million barrels last week-substantially more than expected. On the other side of the […]

Chinese Pantomime Signals coming from the Chinese economy are creating dichotomous pictures when observed through the lens of market pricing versus analysts’ forecasts. Part of the reason for the cognitive dissonance that is clearly developing between observers of the Chinese economy is down to the fact that there are many competing forces vying for dominance […]

UK Government Borrowing News yesterday that the UK government had a surplus ie did not need to borrow in January to the tune of GBP5.4 billion. This followed a December deficit of GBP27.4billion which was the worst performance in the 30 years of records for a December . Before declaring victory that the tide has […]