SGM-FX insights

Japan A jump in the Japanese Yen amid signs from Japan that consumers are starting to spend more which in turn is encouraging manufacturers to raise their prices for the first time in decades. This may just be the catalyst for the Bank of Japan to begin dismantling its gravity defying easy money conditions policy. […]

Sell everything? Let’s hope not. But a return to the ‘sell everything’ mentality was unmistakably present in markets last week. Traders were blindsided by US jobs data on Thursday, with data recording in at nearly double the consensus estimate. Bond prices across virtually all of the Western hemisphere fell alongside stock indices. Despite being more […]

US Economy More over the weekend about good prospects for H2 in the US economy: talk now of a rolling expansion rather than a rolling recession. Positive house prices, strong labour markets and the resilience of the US economy to absorb the recent succession of interest rate rises have given rise to this latest positivity.EUR/USD […]

US Jobs That’s the thing about the weekly employment numbers: for every few times that they correspond to what the market broadly expects, there is a big surprise. Yesterday was just such an occasion: 220,000 new private sector jobs expected but 497,000 was the actual figure. Conclusion: US interest rate rises are not having much […]

What to expect from the Dollar this week Trading conditions within the greenback, or to you and I the US Dollar, often set the tone for the wider market. In fact, due to the dollarisation of global trade, trading conditions and the outright value of the Dollar often set the tone for markets further afield. […]

UK Mortgage Rates The average fixed rate for a 5 year mortgage is 6.01% and for a 2 year mortgage is 6.47%. Given that the average easy access deposit rates stand at 2.45% this means that the gap between 2 year and easy access is at 4.02%. One year ago fixed rate mortgages cost 3% […]

Where will further volatility come from? We have once again entered into a period characterised by data-driven market moves. Markets until only recently seemed comfortable with how future dated contracts had been priced. This was true of most assets from FX forwards, volatility indices including the VIX, equities and treasuries. Despite most developed economies having […]

US Equity Markets With the US S&P Index up 13% half way through the year, statisticians have been out over the weekend and have pronounced that there should be further positive news in H2 2023. In the 22 instances that the S&P has managed 10%+ gains in HI since 1950, the median gain for H2 […]

Federal Reserve Chairman Powell yesterday spoke at the Bank of Spain conference on financial stability in Madrid and set out what sager minds had been expecting: US interest rates will need to rise two or more times before the end of 2023. There are 4 more FOMC meetings this year, the next being July 25/26. […]

Antipodean weakness  Many of the currencies that would have in years gone by been described as high beta, high yielding currencies, are now carving the way for monetary normalisation. The weakness seen in the Kiwi and Aussie Dollars since the start of the year is further emphasising the changing role of AUD and NZD within […]

UK Food Inflation Such is the state of affairs regarding UK inflation that the news that annual food inflation has fallen from 15.4% in May to 14.6% in June was greeted with enthusiasm. Food has taken up the baton from energy when it comes to eye watering levels of UK inflation and despite reassuring words […]

Slim ranges  The theme we noted yesterday continued strong in markets with the weekend’s events failing to have a meaningful impact upon markets. Tight trading ranges prevailed within most markets with measures of volatility failing to breakout higher. Spreads on options remained tight at least within the FX space as implied volatility continued to fall. […]