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. […]

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 […]

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 […]

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 […]

alse Illusions On Friday last week markets had got very exuberant over comments made by the Federal Reserve Chair the day prior. As a result of the interpretation of those comments, the US Dollar had dropped several cents to trade at its recent lows. There was a narrative that was being pieced together and justified […]

Calling the bluff As expected, the Federal Reserve raised interest rates in the United States yesterday evening by a further 50 basis points. As a result of this policy adjustment, immediate target policy levels now stand at 4.25-4.5%. As also expected, the Fed pushed back fairly hard on the idea that it is ready to […]

Pencil to pen As with any year ahead, 2023 has been fervently speculated over by market participants. Whilst forecasts for the forthcoming year take great priority every year, 2023 has perhaps the most divergent set of forecasts between analysts and institutions on recent record. Across asset classes and between institutions the core themes expected to […]

Short covering   Evidence from the CME provides an interesting qualification to the CFTC positioning data that GBP investors have been watching closely. For many years now, markets have held a net short position on GBP, fluctuating from more neutral grounds through to a heavy focus upon achieving selling conviction behind the Pound at times. […]

US CPI   The risk-on mood that kicked off the week has slowly deteriorated, providing a reality check for currencies including those in the EM basket and GBP. Initial optimism surrounding China’s zero-covid potential policy adjustment and the passing of two key central bank risk events last week had supported currencies that have typically suffered […]

USD risk   The hawkish narrative that the Federal Reserve delivered in its latest press conference has been well covered. Jay Powell’s divergence from how the market perceived the peak of US interest rates has provided an element of support to the US Dollar. We can say with conviction that at least in the hours […]

Some way to go   The Federal Reserve somewhat caught the market off guard last night. The US central bank’s efforts in recent months to tame inflation have been nothing short of extraordinary. Late out of the blocks, the Federal Reserve produced last night its fourth consecutive interest rate hike of 0.75%. These enormous, oversized […]

A return to energy   First the context of yesterday’s trading session: Thanks to some data in the United States showing a more robust backdrop than may have been expected, positions that existed across global markets speculating that the Federal Reserve would have to take its foot off the pedal became increasingly untenable. There was […]