SGM-FX insights

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 […]

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 […]

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 […]