SGM-FX insights

A little can be a lot!   The big upside surprise to US inflation last week affected US currency, fixed income, and equity valuations. The market disturbance created by rising price pressures in the real economy was widespread and significant. In addition to the displacement in financial markets already, there is a high probability of […]

US Inflation and the US Bond Market   Headlines last week regarding inflation on both sides of the Atlantic and especially so in the USA which saw sharp rises in forecourt gasoline prices and that always spooks consumers. The 30 Year US Treasury Bond yield increased from 1.89% to 1.95% on the week and oil […]

GBP   At the 2021 low yesterday of USD 1.3364, GBP was suffering from being besieged by the twin forces of a surge in US inflation strengthening the view of higher USD rates, plus the release of September UK economic growth of just 0.6%. Given that the Bank of England had nixed higher rates at […]

From floppy disks to cloud sharing   Looking at inflation projections in the UK, forecasts set to exceed 5% may seem unthinkable to many. The global economy has created an unwaveringly low-inflation, low-interest environment over the past two decades leaving today’s inflation forecasts looking like something of an anomaly. With inflation above target but still […]

US Federal Reserve   Rumours of Fed Governor Lael Brainard being interviewed for the top job instead of Jay Powell sent US Treasury yields lower yesterday due to Ms Brainard’s dovish reputation. Normally such a report would unsettle the market and send yields higher, but in this topsy turvy world, the suggestion of a less […]

Antipodean Re-shuffle?   The Aussie Dollar (AUD) and the Kiwi Dollar (NZD) usually exhibit a fair degree of positive correlation. Their economies share similar characteristics and more importantly are relatively integrated to allow forces in one economy to spill over into the other. There are differentiating factors of course most notably the fact that Australia’s […]

Value Travel   As Brits approach the end of the year, it is traditional to start thinking about next year’s foreign holiday. There are two drivers, firstly the buying power of GBP and secondly the value for money at the various destinations. Leading the pack for positive exchange rate movement since the start of the […]

UK and the Bank of England   Inevitably, given that the market had collectively decided that a rate hike of 0.15% was a nailed on certainty, when the Monetary Policy Committee met yesterday and concluded that they would leave rates unchanged, GBP sold off sharply. Growth expectations for 2021 and 2022 were cut from 7.25% […]

Local Elections – South Africa   Domestic elections in South Africa have arrived amidst an already challenging time for the South African Rand. Having failed to hang on to gains associated with the liberalisation of travel and commerce following the latest wave of pandemic-induced restrictions, the Rand entered this week’s elections vulnerable to selling pressure. […]

US Dollar   As the US Federal Reserve got ready for the start of its 2 day policy meeting last night, expectations were for the announcement later this week for the start of tapering of the huge asset purchase scheme at the onset of Covid. This sent the USD a little firmer and the question […]

Aussie down a cent   The Reserve Bank of Australia (RBA) published its latest monetary policy decision overnight. The concept of buy the rumour sell the news is not new in markets. It refers to the idea of market forces driving up (or down) the price of an asset in anticipation of a future event. […]

USA and EU : steel and aluminium dispute resolution   All that rubber chicken over the G20 weekend has shown one positive outcome at least: peace has broken out in Rome and in future the USA will not apply duties and will allow EU steel and aluminium to be imported into the USA duty free […]