SGM-FX insights

Jackson Hole At the world’s central bankers’ forum there is nothing bigger than today’s speech by Federal Reserve Chairman Powell. What he says about a) Crushing inflation and b) the US employment market will precede his justification for signalling an interest rate cut which in turn will educate what the world can expect for economic […]

Eurozone Yesterday EU inflation came in at 2.6% for the year to end July up from 2.5% to end June. Hardly enough to frighten the horses but the market is all too aware of ECB President Lagarde’s comments regarding inflation in the last few months. On that basis the conclusion is that EU interest rate […]

Volatility Good news and less good news. As we have written recently the Vix or Volatility Index was trading in the high teens before the recent market turmoil on the back of Japan raising interest rates, USA not raising rates and a poor US unemployment number. Then the Vix shot up to 65 before plummeting […]

UK GDP It may not suit the narrative of the UK’s naysayers and doomsters, but Q2 UK GDP showed +0.6%. Apart from being good news for UK plc it almost certainly will dampen the enthusiasm for the Bank of England’s MPC to cut rates again immediately. That in turn strengthens the case for GBP to […]

Oil Between August 2 and 6 oil traded steadily with Brent at $76.50. That changed just over a week ago with fears of an escalation in the Israel-Gaza conflict and a wider Iran involvement. With a spike up to over $82 the market has seen a rise in the oil risk premium on the grounds […]

US Election Plenty to think about as we went into the weekend with Trump finally agreeing to a debate with his rival Kamala Harris on September 10th. That news was however quickly overtaken by the announcement that Trump has agreed to an interview with Elon Musk tonight. Given that the weekend polls now show that […]

Toyota For those without a strong disposition look away. Toyota shares fell 35% in the last few weeks between the beginning of July and now, before recovering 13% in the past days. The reasons are twofold: firstly Toyota has been a major beneficiary of the weak Yen and when that abruptly changed the market reacted. […]

Currency Markets It may be 13 years since he stepped down from the European Central Bank but previous Governor Jean Claude Trichet is still closely listened to by financial markets. So when he spoke yesterday lunchtime and pronounced the recent JPY 10 move in the Japanese Yen versus USD as being a needed and likely […]

USA The question being posed over the weekend is whether the Federal Reserve has left it too late to engineer a soft landing for the US economy by not cutting interest rates last week. July’s unemployment has risen to 4.3% the highest level for 3 years. Having said that GDP has seen growth of an […]

UK Interest Rates Unusually there were almost as many pundits calling for the Bank of England to hold off cutting interest rates yesterday as there were for an immediate reduction. In the event the 25bp cut from 5.25 to 5.00% had initially been discounted by the FX market but that did not prevent a further […]

German Inflation Nothing to do with zeppelins this time, but more to do with German Consumer Price Inflation coming in higher than expected yesterday at up 2.6%. This was a set back for those calling for a cut in EUR interest rates as the mood swung towards the likelihood of the European Central Bank holding […]

British Pound Even optimists on interest rate cuts have been wobbling over the weekend as to the likelihood of a UK interest rate cut in August from the current 5.25%. While it is still expected that rates will be down to 4.75% by year end, the rhetoric has moved to higher for longer. That means […]