SGM-FX insights

European Central Bank  Yesterday the ECB duly raised its interest rates by 25bps. President Lagarde maintained that the ECB was on a journey and had not yet arrived-some would, given that ECB inflation is not dropping and is stuck at 6.9%, interpret that analogy as being their firm intention to continue to raise rates given […]

5-5.25% Yesterday’s Federal Reserve interest rate decision saw the Fed deliver their 10th consecutive rate hike. The May decision only saw rates raised at the central bank level by 25 basis points. Psychologically, this pushes US benchmark rates above the significant 5% level. As we wrote yesterday, raising the cost of debt servicing also adds […]

US Government Default on June 1 without a hike in the Debt Ceiling  Markets (so far) are remarkably sanguine about this appalling scenario for the US and therefore the global economy. President Biden and the Republican House Speaker have not discussed this issue since February-and the Speaker is currently in Jerusalem so unable to meet […]

US Q1 Growth  Expected to come in at plus 2%, US GDP yesterday afternoon only managed an anaemic increase of 1.1% which has given the gloom merchants further ammo as they point to this together with low house sales as evidence that the higher interest rate regime has stalled the US economy which will make […]

US Consumer Confidence  A surprise fall in consumer confidence meant that confidence in April was the lowest since July 2022 and reflected growing fears that the steep interest rate rises would tip the US economy into recession. Against that the expectation for 12 months average inflation in the US is still 6.2%. Hence the wobble […]

US Dollar Eye catching statements from President Lula of Brazil regarding Brazil supporting China in its call for the replacement of the US Dollar by so called de-dollarization with, funnily enough, the BRICS currencies ie Brazil, Russia, India, China and South Africa. Far be it for us to point out the obvious but Russia is […]

UK Growth: February 2023 It is fair to say that this piece could be rather short since the UK economy has not grown at all in February with strikes being given as the prime reason. Maybe it is therefore unsurprising that UK Chancellor Hunt has been very quiet since his Budget Day performance in March. […]

Minutes and data Yesterday saw the release of Federal Reserve minutes as well as the latest US inflation data. Both publications had been eagerly awaited by the market. The minutes were closely watched for their ability to confirm Treasury pricing and provide a control to traders’ understanding of sentiment at the Fed. Inflation data of […]

Isolated treasuries Several weeks ago, treasuries at the short end of the curve fell by around one percent within only a small handful of trading sessions. This meant that the valuations of US national debt due for maturity within a couple of years went up in value and much more violently than such instruments are […]

Markets As we start the first week of April that includes the end of the UK tax year, it is a good time to take stock of the markets as we embark on Q2. Starting with 10 Year Government Bond Yields, both the US and Uk are at 3.47%, Germany at 2.28% and Japan at […]

Breathing room, but not much Following Jay Powell’s recent private testimony to lawmakers, the market’s belief in the Fed’s conviction to stay the course on tackling inflation is rising. The testimony to lawmakers saw the Chairman confirm that dot-plot released during the latest Federal Reserve decision represented a fair summary of the view at the […]

US Interest Rates A frisson running through the Chartists among market operators due to 10 Year US Treasury yields having declined to 3.38%. By monitoring patterns and comparing those patterns to historical bond movements they have deduced that US interest rates have topped out and it’s all downhill yield wise from here. The final factor […]