SGM-FX insights

Republic of South Africa   Following COP26 and the pledge by a handful of richer nations to inject USD8.5 billion in the next 5 years, it is worth looking at the challenge or opportunity depending on your viewpoint. For RSA it is most definitely a challenge but for foreign investors it represents an opportunity. The […]

Where does it stop?   When EURUSD was standing stronger around 1.15, we published in our daily bulletin that the currency pair likely had further to fall based upon our technical studies and sentiment in the market. That expectation has been fulfilled throughout November with only one of the subsequent trading sessions following that break […]

Mary Poppins (1964) and Inflation   Some readers have been asking for an example of the real cost of inflation given that so many appear to have either forgotten or perhaps never studied its pernicious effects. Screened in the UK on BBC on Saturday evening, the 1964 version of Mary Poppins grossed USD 103 million […]

US Economy   Finely balanced is probably the best way to describe how the Federal Reserve views the US economy given that for the past 20 months policy has been directed towards restoring full employment. At one extreme there is a view that there are between 4 and 6 million fewer jobs than prior to […]

One statistic, three currencies   On Tuesday we spoke about consumer price inflation and just how significant the fallout of variations in this statistic can be within the FX market. With particular reference to a 50% above-target reading in the US that had ramifications in the order of hundreds of billions of Dollars in the […]

GBP   GBP was strong yesterday following the release of the UK jobs data which showed payrolls increasing 160,000 in October. The market decided that if the Bank of England had been concerned about the end of furlough and the potential for a hit to employment before raising rates or reducing bond purchases, then this […]

A little can be a lot!   The big upside surprise to US inflation last week affected US currency, fixed income, and equity valuations. The market disturbance created by rising price pressures in the real economy was widespread and significant. In addition to the displacement in financial markets already, there is a high probability of […]

US Inflation and the US Bond Market   Headlines last week regarding inflation on both sides of the Atlantic and especially so in the USA which saw sharp rises in forecourt gasoline prices and that always spooks consumers. The 30 Year US Treasury Bond yield increased from 1.89% to 1.95% on the week and oil […]

GBP   At the 2021 low yesterday of USD 1.3364, GBP was suffering from being besieged by the twin forces of a surge in US inflation strengthening the view of higher USD rates, plus the release of September UK economic growth of just 0.6%. Given that the Bank of England had nixed higher rates at […]

From floppy disks to cloud sharing   Looking at inflation projections in the UK, forecasts set to exceed 5% may seem unthinkable to many. The global economy has created an unwaveringly low-inflation, low-interest environment over the past two decades leaving today’s inflation forecasts looking like something of an anomaly. With inflation above target but still […]

US Federal Reserve   Rumours of Fed Governor Lael Brainard being interviewed for the top job instead of Jay Powell sent US Treasury yields lower yesterday due to Ms Brainard’s dovish reputation. Normally such a report would unsettle the market and send yields higher, but in this topsy turvy world, the suggestion of a less […]

Antipodean Re-shuffle?   The Aussie Dollar (AUD) and the Kiwi Dollar (NZD) usually exhibit a fair degree of positive correlation. Their economies share similar characteristics and more importantly are relatively integrated to allow forces in one economy to spill over into the other. There are differentiating factors of course most notably the fact that Australia’s […]