SGM-FX insights

UK  Well signposted that interests rates would rise by 25bps yesterday which they duly did. However it was the year end inflation forecast that was raised from 4% to 5% that furrowed many brows. The previous promise admittedly from the Government rather than the Bank of England was to halve inflation from 10 to 5 […]

CPI passed, BOE up  US inflation data released yesterday caused volatility within the US Dollar. This was most widely observed within FX spot crosses, however, a deeper look into the forward and swap markets showed more significant price upheavals. Early on in yesterday’s European session forward points on many emerging market vs. US Dollar crosses […]

British Pound  Trading at a 1-year high, British Pound is buoyed by the market being pretty much unanimous on a 25 bp rise in rates tomorrow by the Bank of England. 98% of respondents to a survey have opined as such. The three choices are No Change, plus 25bps or plus 50bps so it is […]

Clockwork  In the weeks ahead expect to see continued focus upon the impending US debt ceiling. The phenomenon is something that rears its head periodically as the US government kicks the can down the narrow road of an increasingly unsustainable fiscal policy constraint. The provision of a legislative limit on the amount of debt that […]

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 […]

Setting the tone Following the bank holiday here in the UK, the market will hit the ground running today. The start of May marks a critical time for markets with numerous heavy weight central banks due to publish rate decisions and some critical data scheduled for release. The overnight session saw focus turn to the […]

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 […]

Time to double down? A rate hike at the ECB next week looks like a foregone conclusion. The only question remaining is whether the bank decides to opt for a 25 or 50 basis point adjustment to its key monetary policy facilities. There is likely to be increased Euro volatility moving into the event. However, […]

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 […]

Winter is coming Here in the UK, we have seen the IMF consistently downgrade growth expectations. Whilst the IMF has been pessimistic specifically on UK growth, routinely placing the UK at the bottom of the pack, global growth forecasts have also been downgraded as interest rates have risen. Still, the condemnation of UK growth looks […]