Morning Brief – US Interest Rates

US Interest Rates

As we begin the first full business week of 2024, let’s recap on where we reached on interest rate reduction expectations for 2024 before the start of the Christmas break: 6 cuts were predicted. Then there was an early New Year wobble that saw markets sell off and those 6 became 3 predicted cuts instead. Then in another plot twist last week the Federal Reserve meeting Minutes were released that explicitly said that inflation was beaten if not over and that there was a risk to the economy of an overly restrictive economic policy. That’s when markets divided into the two camps we have today: the 6s and 3s.

Without further burnishing our inflation spotting record , SGM-FX is a paid up member of the 3s and for good measure is also still a believer in USD.

EUR/USD 1.0945.

Apple

Pub quiz time again: when was the last time that Apple shares fell each day on the first four days of the year as they have done in 2024? The answer is 1982. Exactly a year ago the shares stood at $130 and now they stand at $181. Last month the shares were at $198. The market capitalization of Apple is still USD 2.82 Trillion.

Gym Rats

Traditionally every January people take out gym memberships and make unrealistic pledges and just as inevitably, reality asserts itself by the beginning of February when those elasticated waist bands do look the most sensible option after all. Now apparently we can all exhale and heave a collective sigh of relief, bank the gym money and instead go out and buy a bottle of ….olive oil. Taking a shot of olive oil every morning for 30 days will work wonders on skin, hair, joints and…..weight. It’s all down to the polyphenols present in olive oil. Give it a go.

GBP/EUR 1.1610.

The Loonie

The Canadian Dollar is in the crosshairs of analyst predictions once again, this time being tipped to outperform due to its shallower interest rate reduction curve versus USD. As an oil producer, being a commodity currency and its wealth of natural resources including water, Canada has a lot going for it. CAD has been as low as 1.35 and this year is forecast to strengthen to 1.30 versus USD.

USD/CAD 1.3370.

Triplets

Well almost: today would have been Elvis Presley’s 89^th birthday and it is Dame Shirley Bassey’s 87^th birthday today. It would also have been David Bowie’s 77^th birthday today. Unclear what that signifies other than that today is remarkable for having three such towering musical talents sharing a common birthday.
Here is an appropriate song from the youngest member of that trio:

Didn’t know what time it was and the lights were low
I leaned back on my radio
Some cat was layin’ down some rock ‘n’ roll ‘lotta soul, he said
Then the loud sound did seem to fade
Came back like a slow voice on a wave of phase
That weren’t no D.J. that was hazy cosmic jive

There’s a starman waiting in the sky
He’d like to come and meet us
But he thinks he’d blow our minds
There’s a starman waiting in the sky
He’s told us not to blow it
‘Cause he knows it’s all worthwhile
He told me
Let the children lose it
Let the children use it
Let all the children boogie

I had to phone someone so I picked on you
Hey, that’s far out so you heard him too
Switch on the TV we may pick him up on Channel Two
Look out your window I can see his light
If we can sparkle he may land tonight
Don’t tell your poppa or he’ll get us locked up in fright

There’s a starman waiting in the sky
He’d like to come and meet us
But he thinks he’d blow our minds
There’s a starman waiting in the sky
He’s told us not to blow it
‘Cause he knows it’s all worthwhile
He told me
Let the children lose it
Let the children use it
Let all the children boogie

Starman waiting in the sky
He’d like to come and meet us
But he thinks he’d blow our minds
There’s a starman waiting in the sky
He’s told us not to blow it
‘Cause he knows it’s all worthwhile

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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