SGM-FX insights

Real US Interest Rates Cheer for investors in US markets with the weekend announcement in the US that real interest rates are at 1.8% the highest level in the US since 2007. Without wishing to rain on that particular parade, real interest rates are defined as being nominal rates less the expected rate of inflation. […]

British Pound After a torrid time on Wednesday, there was a steadying session for GBP yesterday with GBP clawing its way back slightly to GBP/USD 1.2050. Interestingly despite the resignation of Nicola Sturgeon and the implications for an independent Scotland, and reported progress on negotiations between the UK and the EU on the Irish border, […]

Knock-On As we have covered, the US Dollar has remained well supported. The bond rally that has been observed over the past few weeks has been reversed in the face of strong US economic data and a hawkish rhetoric coming from Federal Reserve Officials. What is also worth noting is that the presence of a […]

UK Interest Rates With the expectation that the Bank of England will raise interest rates 25 BP in March to 4.25% and then pause, the wage price inflation data released yesterday underlined the fact that there does need to be some stronger medicine to dampen and reverse inflation from more than 5 times the target […]

Pass Through The so-called pass through rate measures the sensitivity of a country’s inflation dynamics to changes in the value of its local currency. In truth, although the term is used to describe causality between currencies and the price level, the effect does run both ways with inflation impacting the exchange rate at the same […]

US Federal Reserve In what investors in the US market are trusting will be the triumph of hope over history, the prevailing sentiment can be boiled down to being pinned on the following: pause-the Fed to hold off on further rate rises; peak-the hope that inflation and rates have indeed peaked; pivot-the hope that far […]

UK Housing Market While the rental market remains firm, house prices fell the most in January since 2009. The Royal Institute of Chartered Surveyors saw buyer interest falling sharply on the back of interest rate rises and fears of recession. Having said that, a Reuters poll predicted that prices would fall a mere 5% in […]

The same old problem The continuous evolution of and speculation over the peak of Federal Reserve interest rates has continued to wreak havoc upon emerging market currencies and assets. Due to the preeminence of the Federal Reserve, it can frequently be read as a proxy for global rates. As we have spoken about recently, the […]

Federal Reserve Chair Jerome Powell gave a speech in Washington last night that further confirmed his hard line thinking: US interest rates will need to go up more and probably it will take two separate rate rises to see if that is sufficient-the clear implication is that if it needs more, then that is what […]

Never a dull non-farm Non-farm payrolls data almost always provides the observers an opportunity to witness and potentially trade with some volatility in the markets. More often than not the salience of the event and the mixed expectations moving into it leads to more price fallout from the noise generated from the event instead of […]

US Economy The US job figures on Friday most certainly set the cat among the pigeons: with non farm payrolls expected to be up by 187,000 and the market’s expectation that Chairman Powell of the Federal Reserve was talking the talk rather than walking the walk when he had said last Wednesday that rates were […]

UK Housing Market Plenty of comment about the UK’s housing market and where it is headed, but maybe it’s time to boil down the essentials for the next year: with rates higher and unemployment likely to rise, conventional wisdom suggests that the housing market will fall. However, there are two key differences to recent previous […]