Morning Brief – US Federal Reserve

Morning Brief – US Federal Reserve

Wed 27 Jul 2022

US Federal Reserve


The attractions of a central bank giving forward guidance on interest rate policy were based on predictability amid stable monetary conditions. Now that has all gone out of the window and what is essentially a problem of the central banks’ own making is looming large. The idea is that through Delphic language the central banks should manage market expectations and in return the world’s largest financial institutions should behave in accordance with the forward guidance. First out of the box in the line up of increasingly uncomfortable central bankers is Chairman Powell of the Federal Reserve who has just announced that it is all a bit hard as forward guidance may be subject to change in the light of different circumstances. In other words Chair Powell is somewhat sheepish as his forward guidance has proved to be somewhat less than guidance and rather more optimistic hopes. At least he can console himself that his global peers will have to eat equal sized slices of humble pie- no consolation to everybody suffering from the worst inflation for 40 years. EUR/USD 1.0125


German Gas


Unfortunately especially for Germany and Europe as we all know Germany does not have gas of its own. Things have got (even)worse for Germany overnight with the Nordstream pipeline being reduced from 40% of capacity to 20% in what is being piped. Politically this is toxic- blame.

Economically it is disastrous- cost and effect on the German industrial machine. Socially this reduction will almost certainly lead beyond voluntary cuts to rationing and what in a modern democratic leading nation has hitherto been unthinkable: consumer prioritisation by the state. Until recently German gas reserves had been increasing but that increase has not only plateaued but reversed which does not bode well ahead of the winter. GBP at least benefitting from EUR pain with GBP/EUR 1.1823.


Czech Mate


Tempted to put your foot down in your Ferrari 458 Italia with less than 2000kms on the clock ? Feel the vibration of the 4.5 litre V8 engine as you see the horizon approaching at 320 kph, sure, just don’t do it in the Czech Republic unless you are prepared for your pride and joy to be confiscated, modified with Police decals and turned into a Police chase vehicle which is exactly what those sense of humour challenged Czechs did this week to one unlucky punter. Equally firm are the wider Czech population with no sign of a softening in the stance of Czech Republic‘s strong opposition to joining the Euro and EUR/CZK 24.59.


Annie’s Song


John Denver singer songwriter and he of the ill-fated final microlight flight high above the Pacific Ocean plus claim to fame for being an eco-warrior before it became fashionable, released this song in 1974 when it filled the airwaves with his warbling vocals non stop every day that year in the month of July and very often in subsequent months.

You fill up my senses
Like a night in a forest
Like the mountains in springtime
Like a walk in the rain
Like a storm in the desert
Like a sleepy blue ocean
You fill up my senses
Come fill me again

Come, let me love you
Let me give my life to you
Let me drown in your laughter
Let me die in your arms
Let me lay down beside you
Let me always be with you
Come, let me love you
Come love me again

Let me give my life to you
Come, let me love you
Come love me again




Discussion and Analysis by Humphrey Percy, Chairman and Founder

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