Connecting Global Markets and Policy
Persian Daric – First Global Reserve Currency. Guaranteed 95.83% purity gold. Introduced by Darius I the Great, 521 – 486 BC. In circulation until 330 BC defeat of the Persian Achaemenid Empire by Alexander the Great of Macedonia.
SGH Macro Advisors produces concise, forward-looking proprietary reports on the major central banks and on key economic and policy developments that drive global bond, equity, and currency markets.
Founded in 2009, SGH has over the years built a reputation as a thought leader and source of well-informed, cutting-edge information, analysis, and insight on policy and financial markets. Its briefings and reports are highly valued by many of the world’s most well-known and influential hedge funds, money managers, and policymakers.
Highlights
SGH reports are highly valued for keeping clients and policymakers informed and well-ahead of market consensus.
October 19, 2025
SGH Insight
Bottom Line: We see very thin tails for this next FOMC meeting; between Powell and Waller it’s clear the Fed will cut rates 25bp. We assess the odds of an October cut 0/25/50 at 2.5%/95%/2.5%. The ongoing government shutdown and its potential impacts on the labor market leads us to skew the probabilities of a December cut slightly more toward the risk of 50bp with odds of 0/25/50 at 10%/75%/15%.
Market Validation
Bloomberg 10/24/25
Treasuries gained after a delayed report on inflation showed consumer prices rose less than expected, reinforcing bets the Federal Reserve will cut interest rates next week.
Yields on two-year notes — which are most sensitive to changes in monetary policy — dipped as much as five basis points. Yields on benchmark 10-year notes fell back below 4% after the reading, approaching their lowest levels since April.
Interest-rate swaps signaled traders all but fully priced in a quarter-point rate cut at the Fed’s meeting next week, followed by another reduction in December.
Treasuries gained after a delayed report on inflation showed consumer prices rose less than expected, reinforcing bets the Federal Reserve will cut interest rates next week.
Yields on two-year notes — which are most sensitive to changes in monetary policy — dipped as much as five basis points. Yields on benchmark 10-year notes fell back below 4% after the reading, approaching their lowest levels since April.
Interest-rate swaps signaled traders all but fully priced in a quarter-point rate cut at the Fed’s meeting next week, followed by another reduction in December.
October 16, 2025
SGH Insight
Bottom line: Sanae Takaichi is on the brink of becoming Japan’s first woman Prime Minister, with Ishin no Kai poised to deliver the votes the LDP needs to reclaim a governing majority. A coalition deal, aided by strategic policy overlap and made more urgent by Trump’s upcoming visit, is likely within days — positioning Takaichi as both Japan’s new reformer and a lightning rod for renewed US-Japan alignment.
Market Validation
Bloomberg 10/20/25
Japan’s ruling Liberal Democratic Party
signed a coalition deal with the Japan Innovation Party, setting
up Sanae Takaichi to become the country’s first female prime
minister.
LDP President Takaichi and Hirofumi Yoshimura, co-leader of
the JIP, known as Ishin, signed the coalition agreement on
Monday evening.
Japan’s ruling Liberal Democratic Party
signed a coalition deal with the Japan Innovation Party, setting
up Sanae Takaichi to become the country’s first female prime
minister.
LDP President Takaichi and Hirofumi Yoshimura, co-leader of
the JIP, known as Ishin, signed the coalition agreement on
Monday evening.
October 13, 2025
SGH Insight
1. We believe the Fed is very likely to follow through with the September SEP and cut rates 25bp at each of the October and December FOMC meetings.
2. The risks to the October and December meetings are more likely toward a larger-than-expected cut.
Market Validation
2. The risks to the October and December meetings are more likely toward a larger-than-expected cut.
Bloomberg 10/16/25
Treasuries extend gains and futures push to fresh highs of the day led by the front-end of the curve, steepening 2s10s spread out to fresh session wides. Into the move, 2-year yields drop to lowest since Sept. 2022 to around 3.425% and richer by almost 7bp on the day.
Treasuries bull steepen with yields 7bp to 2bp lower across the curve; Fed-dated OIS shifts to fully price in two 25bp rate cuts over the remaining two meetings this year
Treasuries extend gains and futures push to fresh highs of the day led by the front-end of the curve, steepening 2s10s spread out to fresh session wides. Into the move, 2-year yields drop to lowest since Sept. 2022 to around 3.425% and richer by almost 7bp on the day.
Treasuries bull steepen with yields 7bp to 2bp lower across the curve; Fed-dated OIS shifts to fully price in two 25bp rate cuts over the remaining two meetings this year
October 10, 2025
SGH Insight
This week Beijing tightened restrictions around exports of its rare earth minerals and magnets with no official explanation, eliciting an angry outburst today by Trump who threatened to respond with tariffs in kind.
Beijing’s move is a direct, deliberate, and in our view highly ill-conceived threat to Washington to remove the fentanyl tariffs after what was to be a conciliatory, albeit frosty, meeting between Trump and Chinese Communist Party leader Xi Jinping on the sidelines of the APEC meeting in South Korea on October 31 – November 1.
The intent, and threat, from Beijing is clear, and as we wrote above, we believe extremely ill-advised, as we do not share Beijing’s presumption that President Trump will be so quick to accede to Beijing’s tariff demands under deliberate attacks on US markets, and industry.
Market Validation
Beijing’s move is a direct, deliberate, and in our view highly ill-conceived threat to Washington to remove the fentanyl tariffs after what was to be a conciliatory, albeit frosty, meeting between Trump and Chinese Communist Party leader Xi Jinping on the sidelines of the APEC meeting in South Korea on October 31 – November 1.
The intent, and threat, from Beijing is clear, and as we wrote above, we believe extremely ill-advised, as we do not share Beijing’s presumption that President Trump will be so quick to accede to Beijing’s tariff demands under deliberate attacks on US markets, and industry.
Bloomberg 10/14/25
US President Donald Trump said he would
impose an additional 100% tariff on China and export controls on
“any and all critical software” beginning November 1, hours
after threatening to cancel an upcoming meeting with the
country’s leader, Xi Jinping.
“It has just been learned that China has taken an
extraordinarily aggressive position on Trade in sending an
extremely hostile letter to the World, stating that they were
going to, effective November 1st, 2025, impose large scale
Export Controls on virtually every product they make, and some
not even made by them,” Trump said in a social media post.
US President Donald Trump said he would
impose an additional 100% tariff on China and export controls on
“any and all critical software” beginning November 1, hours
after threatening to cancel an upcoming meeting with the
country’s leader, Xi Jinping.
“It has just been learned that China has taken an
extraordinarily aggressive position on Trade in sending an
extremely hostile letter to the World, stating that they were
going to, effective November 1st, 2025, impose large scale
Export Controls on virtually every product they make, and some
not even made by them,” Trump said in a social media post.
August 22, 2025
SGH Insight
Bottom Line: Positive inflation in June and July, matching the SNB’s June macroeconomic projections, offer the central bank a path to hold rates in September. Since another cut would mean the return of negative interest rates, the bar for such a move is relatively high.
Market Validation
Bloomberg 9/25/25
President Martin Schlegel and his two colleagues kept their benchmark at zero, acknowledging that the 39% levy imposed by Donald Trump — the highest for any advanced economy — will cause pain, while insisting that the fallout isn’t yet widespread enough to justify a cut.
“The bar to go into negative territory with interest rates is certainly higher than just a normal rate cut,” Schlegel said. “We are aware that this negative interest rates could be a challenge for many actors in the economy. At the same time if it’s really necessary to fulfill our mandate we are ready to use all the tools that are available — also negative interest rates.”
President Martin Schlegel and his two colleagues kept their benchmark at zero, acknowledging that the 39% levy imposed by Donald Trump — the highest for any advanced economy — will cause pain, while insisting that the fallout isn’t yet widespread enough to justify a cut.
“The bar to go into negative territory with interest rates is certainly higher than just a normal rate cut,” Schlegel said. “We are aware that this negative interest rates could be a challenge for many actors in the economy. At the same time if it’s really necessary to fulfill our mandate we are ready to use all the tools that are available — also negative interest rates.”
September 21, 2025
SGH Insight
Powell provides an economic outlook this week and we see little reason for him to deviate substantially from his August speech or post-FOMC press conference comments.
Market Validation
Bloomberg 9/23/25
Powell’s remarks hewed closely to those he made in a press conference on Sept. 17 after Fed policymakers lowered the central bank’s benchmark interest rate to a range of 4%-4.25%, the first reduction of 2025. Powell at the press conference described the move as a “risk-management cut” aimed at responding to growing warning signs in the labor market.
Powell’s remarks hewed closely to those he made in a press conference on Sept. 17 after Fed policymakers lowered the central bank’s benchmark interest rate to a range of 4%-4.25%, the first reduction of 2025. Powell at the press conference described the move as a “risk-management cut” aimed at responding to growing warning signs in the labor market.
September 14, 2025
SGH Insight
The Fed is set to return to rate cuts this week now that Powell sees the risk of higher inflation is equal to the risk of rising unemployment. The Fed will view upcoming rate cuts as a “recalibration” of policy as it feels its way to the neutral rate. The data has yet to make a case for below neutral rates; the labor market needs to exhibit a more dramatic deterioration to get there.
We assume that both Federal Reserve Governor Lisa Cook and nominee Stephen Miran will attend the meeting and submit forecasts. The Senate is scheduled to vote on Miran’s confirmation Monday, allowing him to attend the FOMC meeting that begins on Tuesday. There is a risk that Miran dissents in favor of a 50bp cut while Kansas City Federal Reserve President Jeffrey Schmid dissents in favor of holding rates steady. We don’t expect Waller or Bowman to dissent; they said their peace at the last FOMC meeting.
Market Validation
We assume that both Federal Reserve Governor Lisa Cook and nominee Stephen Miran will attend the meeting and submit forecasts. The Senate is scheduled to vote on Miran’s confirmation Monday, allowing him to attend the FOMC meeting that begins on Tuesday. There is a risk that Miran dissents in favor of a 50bp cut while Kansas City Federal Reserve President Jeffrey Schmid dissents in favor of holding rates steady. We don’t expect Waller or Bowman to dissent; they said their peace at the last FOMC meeting.
Dow Jones 9/17/25
Fed governor Stephen Miran has been on the job barely over 24 hours, yet he is starting his tenure with a splash. Miran is the lone dissenter against the Fed's quarter-point rate cut in September, voting instead in favor of a larger 50-basis-point cut. Analysts had speculated that Trump-appointed governors Michelle Bowman and Christopher Waller were other possible dissenters in favor of a larger cut, but both chose to back the majority's quarter-point move. And despite voicing skepticism of cuts in recent months, hawkish Kansas City Fed president Jeffrey Schmid also raised his hand in favor of the quarter-point rate reduction. (matt.grossman@wsj.com; @mattgrossman)
Fed governor Stephen Miran has been on the job barely over 24 hours, yet he is starting his tenure with a splash. Miran is the lone dissenter against the Fed's quarter-point rate cut in September, voting instead in favor of a larger 50-basis-point cut. Analysts had speculated that Trump-appointed governors Michelle Bowman and Christopher Waller were other possible dissenters in favor of a larger cut, but both chose to back the majority's quarter-point move. And despite voicing skepticism of cuts in recent months, hawkish Kansas City Fed president Jeffrey Schmid also raised his hand in favor of the quarter-point rate reduction. (matt.grossman@wsj.com; @mattgrossman)
September 2, 2025
SGH Insight
The ECB will hold interest rates unchanged at its policy meeting on September 11. On-target inflation, and trend growth are coming in line with the June macroeconomic projections, reinforcing the hawkish narrative that interest rates are “in a good place.”US tariffs and weak economic sentiment risk pushing inflation below the central bank’s projections. This uncertain environment will keep the possibility of a rate cut alive in the coming months. However, for that to happen inflation and growth need to come in below the ECB’s projections.
Market Validation
Bloomberg 9/11/25
German bonds are paring losses across the curve after the European Central Bank retained key language from its guidance but raised its inflation forecast for this year and the next in what is a carefully balanced report.
Here’s the relevant part from its statement:
“It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance...The Governing Council is not pre-committing to a particular rate path.”
That is virtually a repeat of what it had said in July. The message, clearly, is that the governing council is reluctant to surrender the optionality of cutting rates further should the euro-zone economy weaken.
German bonds are paring losses across the curve after the European Central Bank retained key language from its guidance but raised its inflation forecast for this year and the next in what is a carefully balanced report.
Here’s the relevant part from its statement:
“It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance...The Governing Council is not pre-committing to a particular rate path.”
That is virtually a repeat of what it had said in July. The message, clearly, is that the governing council is reluctant to surrender the optionality of cutting rates further should the euro-zone economy weaken.
August 22, 2025
SGH Insight
Canada’s continued disappointing growth, coupled with sentiment dampened by trade uncertainty and the Bank of Canada’s (BOC) view that its preferred core inflation measures may be overstating price pressures, has reiterated our view that the Bank could resume its easing cycle next month.
Though the Bank held its policy rate at 2.75% last month, its communications shifted dovishly with Governor Tiff Macklem making clear in the opening statement of his press conference that the council members are not convinced the recent run-up in core inflation pressures will persist.
Market Validation
Though the Bank held its policy rate at 2.75% last month, its communications shifted dovishly with Governor Tiff Macklem making clear in the opening statement of his press conference that the council members are not convinced the recent run-up in core inflation pressures will persist.
Bloomberg 9/5/25
The Canadian economy surprisingly shed jobs for a second consecutive month as the unemployment rate jumped, increasing the likelihood of an interest rate cut from the Bank of Canada this month.
Employment fell by 65,500 positions in August, driven by decreases in part-time work. The jobless rate rose to 7.1%, Statistics Canada data showed Friday. The number of job losses surpassed even the most pessimistic projection in a Bloomberg survey of economists — the median forecast was for 5,000 jobs to be created.
Losses were led by self-employment and service-related industries — transportation, professional services and education sectors all shed jobs. Employment fell by more than 19,000 positions in the manufacturing sector.
The yield on benchmark two-year Canada government bonds fell about 6 basis points to 2.554%, while the loonie fluctuated to trade at C$1.38 per US dollar as of 8:40 a.m. in Ottawa. Traders boosted bets that the Bank of Canada would lower rates at its next meeting Sept. 17, pricing in about an 80% chance of a cut.
Dow Jones - Ottawa 9/17/25
The Bank of Canada cut on Wednesday its benchmark interest rate by a quarter-point to 2.5%, citing a weaker job market and waning momentum in underlying inflation.
This marks a resumption of rate cuts for Canada's central bank, after a six-month pause as officials worried about upward pressure on inflation from tariffs. Gov. Tiff Macklem said data suggest that upward momentum in core inflation -- which strips out volatile items like food and energy -- has "dissipated," and Canada's decision to abandon most retaliatory tariffs on U.S. products "will mean less pressure on the prices of these goods going forward."
The Canadian economy surprisingly shed jobs for a second consecutive month as the unemployment rate jumped, increasing the likelihood of an interest rate cut from the Bank of Canada this month.
Employment fell by 65,500 positions in August, driven by decreases in part-time work. The jobless rate rose to 7.1%, Statistics Canada data showed Friday. The number of job losses surpassed even the most pessimistic projection in a Bloomberg survey of economists — the median forecast was for 5,000 jobs to be created.
Losses were led by self-employment and service-related industries — transportation, professional services and education sectors all shed jobs. Employment fell by more than 19,000 positions in the manufacturing sector.
The yield on benchmark two-year Canada government bonds fell about 6 basis points to 2.554%, while the loonie fluctuated to trade at C$1.38 per US dollar as of 8:40 a.m. in Ottawa. Traders boosted bets that the Bank of Canada would lower rates at its next meeting Sept. 17, pricing in about an 80% chance of a cut.
Dow Jones - Ottawa 9/17/25
The Bank of Canada cut on Wednesday its benchmark interest rate by a quarter-point to 2.5%, citing a weaker job market and waning momentum in underlying inflation.
This marks a resumption of rate cuts for Canada's central bank, after a six-month pause as officials worried about upward pressure on inflation from tariffs. Gov. Tiff Macklem said data suggest that upward momentum in core inflation -- which strips out volatile items like food and energy -- has "dissipated," and Canada's decision to abandon most retaliatory tariffs on U.S. products "will mean less pressure on the prices of these goods going forward."
September 1, 2025
SGH Insight
The Federal Reserve is set to deliver a 25bp rate cut at the September FOMC meeting. By putting his thumb on the scale at Jackson Hole and framing the decision as forecast-dependent rather than data-dependent, Chair Jerome Powell has effectively locked in that outcome. The labor market is the focus now that Powell has decided to treat any elevated inflation as transitory until proven as persistent. While stronger than expected employment and inflation reports may cause market participants to call into question the Fed’s commitment to a September rate cut, we think the die is already cast for that meeting. Incoming data will have little bearing on the outcome of the September meeting and instead will shape expectations for the policy path for October and December as the FOMC releases a fresh SEP that will serve as de facto calendar guidance for the remainder of 2025. The Fed is on course to ease policy toward neutral, with our baseline calling for a quarterly pace of rate cuts, at least until the data provide a clearer signal otherwise. A weak employment report would help shift the narrative toward greater concern the Fed has fallen behind the curve and increase speculation that it would need to take rates below neutral to limit damage to the labor market.
Market Validation
Bloomberg 9/5/25
US Treasuries rallied as a weaker-than-expected jobs report prompted traders to fully price an interest-rate cut by the Federal Reserve this month.
Yields on two-year notes, which are most sensitive to changes in monetary policy, fell as much as 8 basis points to 3.5%,
Interest-rate swaps showed traders priced in a 98% probability of a quarter-point cut by the Fed at the Sept. 17 meeting. A total of 142 basis points of easing were expected over the next 12 months.
Nonfarm payrolls increased 22,000 in August after a combined 21,000 downward revision to the prior months, according to a Bureau of Labor Statistics report out Friday. The jobless rate ticked up to 4.3%, the highest level since late 2021.
US Treasuries rallied as a weaker-than-expected jobs report prompted traders to fully price an interest-rate cut by the Federal Reserve this month.
Yields on two-year notes, which are most sensitive to changes in monetary policy, fell as much as 8 basis points to 3.5%,
Interest-rate swaps showed traders priced in a 98% probability of a quarter-point cut by the Fed at the Sept. 17 meeting. A total of 142 basis points of easing were expected over the next 12 months.
Nonfarm payrolls increased 22,000 in August after a combined 21,000 downward revision to the prior months, according to a Bureau of Labor Statistics report out Friday. The jobless rate ticked up to 4.3%, the highest level since late 2021.
August 25, 2025
SGH Insight
Finally, one official’s comments after last night’s CNY fixing:
“As the US is going to enter a rate-cutting cycle, the exchange rate of the RMB against the USD would show an orderly and moderate appreciation trend. The central parity rate of the RMB against the USD is expected to rebound to the 7.0 level by the end of this year.”
Market Validation
“As the US is going to enter a rate-cutting cycle, the exchange rate of the RMB against the USD would show an orderly and moderate appreciation trend. The central parity rate of the RMB against the USD is expected to rebound to the 7.0 level by the end of this year.”
Bloomberg 8/29/25
China’s central bank is nudging the yuan
higher, stoking speculation of a subtle shift in strategy toward
favoring a stronger exchange rate after strong exports
brightened the nation’s growth outlook.
The People’s Bank of China raised its daily reference rate
for the yuan by the most in nearly a year this week even as the
dollar was largely unchanged. This may signal authorities are
not only comfortable with a stronger currency but looking to
engineer a gradual appreciation, according to some market
watchers.
China’s central bank is nudging the yuan
higher, stoking speculation of a subtle shift in strategy toward
favoring a stronger exchange rate after strong exports
brightened the nation’s growth outlook.
The People’s Bank of China raised its daily reference rate
for the yuan by the most in nearly a year this week even as the
dollar was largely unchanged. This may signal authorities are
not only comfortable with a stronger currency but looking to
engineer a gradual appreciation, according to some market
watchers.
August 15, 2025
SGH Insight
The [CFEAC] meeting also stressed that China should ….promote the research and development of a digital currency, further promote the internationalization of the RMB, and maintain a steady appreciation of the RMB against a basket of currencies while reducing its holdings of USD assets in FX reserves (all long held objectives).
SGH 7/24/25, “China: Preparing for Bessent Meeting in Stockholm:”
“Regarding the RMB exchange rate, we admit that the appreciation of the RMB against the USD is the smallest compared to other major currencies. In H1 2025, the euro rose by 13.8% against the US dollar; the Swiss franc rose by 12.6% against the US dollar; the British pound rose by 10% against the US dollar; the Japanese yen rose by 8%, while the RMB rose by only 1.9%. Despite this, the RMB against the USD would still fluctuate at its own pace in H2 based on the domestic economic situation, with the maximum appreciation likely to be around 5.0%.” [Author’s note – we have heard some tolerance for this controlled scale of RMB appreciation before].
Market Validation
SGH 7/24/25, “China: Preparing for Bessent Meeting in Stockholm:”
“Regarding the RMB exchange rate, we admit that the appreciation of the RMB against the USD is the smallest compared to other major currencies. In H1 2025, the euro rose by 13.8% against the US dollar; the Swiss franc rose by 12.6% against the US dollar; the British pound rose by 10% against the US dollar; the Japanese yen rose by 8%, while the RMB rose by only 1.9%. Despite this, the RMB against the USD would still fluctuate at its own pace in H2 based on the domestic economic situation, with the maximum appreciation likely to be around 5.0%.” [Author’s note – we have heard some tolerance for this controlled scale of RMB appreciation before].
Bloomberg 8/25/25
China strengthened its yuan fixing by the
most since January after the dollar slumped in the wake of
Federal Reserve Chair Jerome Powell’s commentary at Jackson
Hole.
The People’s Bank of China set its daily reference rate for
the local currency at 7.1161 per dollar, versus Friday’s level
of 7.1321. Monday’s fixing was the strongest since November.
China strengthened its yuan fixing by the
most since January after the dollar slumped in the wake of
Federal Reserve Chair Jerome Powell’s commentary at Jackson
Hole.
The People’s Bank of China set its daily reference rate for
the local currency at 7.1161 per dollar, versus Friday’s level
of 7.1321. Monday’s fixing was the strongest since November.
News and Events
SGH Macro Advisors hosts occasional roundtables and events for clients and senior policymakers.