SGM-FX insights

Bank of England When the Monetary Policy Committee raised interest rates yesterday by 25bps, that was broadly expected since the concerns about the health of the banking system had largely receded -at least in the UK. What was not expected was the leading once again with the corporate chin by the Governor with the pronouncement […]

Testing conviction With a Bank of England decision scheduled for later today and a Federal Reserve decision last night ringing in the ears of markets, traders should be braced for volatility. The decision last night by the Federal Reserve showed the FOMC treading a delicate path between demonstrating their commitment to taming inflation but being […]

Bank of England The UK’s Monetary Policy Committee will pronounce tomorrow and uppermost in their minds will be the UK Inflation release which came out first thing this morning. Because it is higher at 10.4% rather than significantly lower than last month’s annualised 10.1%, not only does the Bank of England have more egg on […]

Minsky Moment There has been a lot of attention paid to the increasing divergence in economic forecasts produced by analysts and policy makers. We know that the source of this diverge is uncertainty. The incomplete puzzle of the unfolding post-pandemic economy is leading to vastly different forecasts from largely similar financial contributors. The evolution of […]

Big Week With news about the arranged marriage of Credit Suisse to UBS announced on Sunday night following the bank’s CHF 50 billion liquidity line injection last week, repercussions from the failures of SVB and Signature Bank and fears for First Republic Bank despite a USD 30 billion multi bank rescue, expectations for a 50 […]

European Central Bank Doubtless the ECB wished that their awaited meeting and press conference had not been scheduled to take place yesterday given the fragile state of global markets. Although an improvement on the febrile atmosphere earlier in the week following the affirmative and decisive action from the Swiss National Bank in providing a USD […]

David and Goliath Yesterday’s FX market was characterised by heavy Euro weakness and a surging US Dollar. The only discussion taking place in the market yesterday, aside from a minor distraction in the form of Jeremy Hunt’s budget, was Credit Suisse. So, can the Goliath of the US Dollar really be undermined by a single […]

US Consumer Price Index Yesterday’s release must rank as one of the most closely watched numbers for many years given the Federal Reserve’s rhetoric, in the context of its rate rising policy, the mixed US economic picture and now the banking contagion fears following the failure of 3 sizeable US banks. Before the release, expectations […]

Fed’s pickle The Federal Reserve is meeting next Wednesday for its latest monetary policy announcement. Focus upon the event has been immense. However, given the turmoil in the financial sector created by the forced sales of both Silicon Valley Bank and Signature Bank last week, speculation over the rate decision has been increasingly predicated upon […]

Is the US already in recession? Due to the mixed messages from recent economic releases on the state of the US economy with for example record low unemployment while at the same time there is increasing data on lay offs especially in the tech sector, it is worth asking the question: Is the US already […]

British Pound A better day for GBP as Sterling clawed back almost half of its losses from earlier in the week. Following Federal Reserve Chair Powell’s comments on higher for longer US interest rates on Tuesday, the USD strengthened sharply at the expense of all currencies and was then evidenced by a sickly looking GBP. […]

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 […]