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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.
November 9, 2025
SGH Insight
A growing number of Fed officials, including Board members, are building a narrative with four basic parts to support a skip at the December meeting. First, inflation remains too high and requires modestly restrictive policy rates. Second, the labor market as measured by initial claims is not deteriorating. Third, policy rates are modestly restrictive and maybe overall financial conditions are neutral or even stimulative. Fourth, the first 50bp of cuts this year were insurance so the Fed can now potentially wait and see if further cuts are necessary. Indeed, Vice Chair Philip Jefferson assessed the situation as “it makes sense to proceed slowly as we approach the neutral rate.”
Market Validation
Bloomberg 11/19/25
Many Federal Reserve officials said it would likely be appropriate to keep interest rates steady for the remainder of 2025, according to minutes of the Federal Open Market Committee’s October 28-29 meeting.
The record of the meeting, released Wednesday in Washington, also showed “several” policymakers were against lowering the Fed’s benchmark rate at that gathering.
“Many participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year,” the minutes said.
Many Federal Reserve officials said it would likely be appropriate to keep interest rates steady for the remainder of 2025, according to minutes of the Federal Open Market Committee’s October 28-29 meeting.
The record of the meeting, released Wednesday in Washington, also showed “several” policymakers were against lowering the Fed’s benchmark rate at that gathering.
“Many participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year,” the minutes said.
November 16, 2025
SGH Insight
We think the Fed is poised to leave the policy rate unchanged at the December FOMC meeting, and if so, that would make a January rate cut unlikely as well. It’s not just the drumbeat of more hawkish FOMC members has grown louder but it also became clear last week that FOMC participants considered centrist-to-dovish already had turned considerably more hawkish by the time of the October meeting. Some were seeking not just a skip but a pause. While market participants are focused on the employment side of the mandate, momentum at the Fed has turned toward the inflation side of the mandate. An increasing number of Fed officials see the 50bp of rate cuts in September and October as leaving policy very near neutral and sufficient to address the downside risks to the labor market.
Market Validation
Bloomberg 11/19/25
Traders expect that the Federal Reserve is more likely to hold off from cutting interest rates at the December policy meeting after the Bureau of Labor Statistics said it will not publish an October employment report.
A wave of sellers emerged in the fed funds futures after BLS confirmed it won’t have sufficient data to publish the report, as traders scaled back expectations for a 25-basis point rate cut at the Dec. 10 gathering. They now expect the central bank to keep the benchmark rate at the 3.75% to 4% range.
The swaps market linked to the Fed policy rate is pricing in just six basis points of easing — equivalent to around 24% of a quarter-point cut — for the December meeting and just a combined 19 basis points of easing by January. Before Wednesday, swaps were pricing 11 basis points, roughly a coin flip chance of the central bank cutting rates in three weeks time.
Traders expect that the Federal Reserve is more likely to hold off from cutting interest rates at the December policy meeting after the Bureau of Labor Statistics said it will not publish an October employment report.
A wave of sellers emerged in the fed funds futures after BLS confirmed it won’t have sufficient data to publish the report, as traders scaled back expectations for a 25-basis point rate cut at the Dec. 10 gathering. They now expect the central bank to keep the benchmark rate at the 3.75% to 4% range.
The swaps market linked to the Fed policy rate is pricing in just six basis points of easing — equivalent to around 24% of a quarter-point cut — for the December meeting and just a combined 19 basis points of easing by January. Before Wednesday, swaps were pricing 11 basis points, roughly a coin flip chance of the central bank cutting rates in three weeks time.
November 13, 2025
SGH Insight
Bottom Line: Collins was very explicit, which perhaps she needed to be considering that market participants did not appear to see Jefferson as a credible messenger for a skip. The clear guidance ahead of the data suggests that the bulk of FOMC participants do not anticipate anything in the September employment report that would demand a December rate cut. Moreover, National Economic Council director Kevin Hassett confirmed the October household survey will not be released, but the employer survey will be, which is expected to show headline weakness due to the federal layoffs. Also, while the meeting minutes are not released until next week, it’s clear that the discussion at the October FOMC meeting was more hawkish than markets had appreciated and opened the possibility of not cutting in both December and January. That leads us to place greater odds, 80% up from 60%, of no cut in December, and 60% of no cut in January.
Market Validation
Bloomberg 11/19/25
January federal funds futures saw heavy selling flows after the US Bureau of Labor Statistics said it won’t publish an employment report for October.
Around 30,000 January fed funds contracts were sold at 96.25 on the news, knocking the contract to lows of the day
Fed-dated OIS strip priced in less Fed easing in the coming months, leaving around 8bp for the December policy meeting vs 11bp at Tuesday’s close and 19bp for January vs 21bp previously
January contract dropped as low as 96.210, lowest since Aug. 26
January federal funds futures saw heavy selling flows after the US Bureau of Labor Statistics said it won’t publish an employment report for October.
Around 30,000 January fed funds contracts were sold at 96.25 on the news, knocking the contract to lows of the day
Fed-dated OIS strip priced in less Fed easing in the coming months, leaving around 8bp for the December policy meeting vs 11bp at Tuesday’s close and 19bp for January vs 21bp previously
January contract dropped as low as 96.210, lowest since Aug. 26
October 30, 2025
SGH Insight
We detect widespread resistance to flipping December calls to no cut, ourselves included. We think, however, that’s the direction this is heading.
Despite Federal Reserve Chair Jerome Powell’s hawkish press conference, market pricing for a December cut remains high at 73%, not too far below the odds of 0/25/50 at 20%/75%/5% we placed on a cut after the press conference. These odds are almost certainly too high.
We are now leaning toward a 60% probability of no cut in December (0/25/50 at 60%/40%/0%) and will just need to take the chance we don’t have to flip it on data.
Market Validation
Despite Federal Reserve Chair Jerome Powell’s hawkish press conference, market pricing for a December cut remains high at 73%, not too far below the odds of 0/25/50 at 20%/75%/5% we placed on a cut after the press conference. These odds are almost certainly too high.
We are now leaning toward a 60% probability of no cut in December (0/25/50 at 60%/40%/0%) and will just need to take the chance we don’t have to flip it on data.
Bloomberg 11/13/25
Treasuries fell and traders pulled back on bets that the Federal Reserve is set to bring down interest rates next month as policymakers cautioned against further reductions.
Odds of a December cut assigned by the market slipped below 50% as Fed officials signaled concern about inflation that remains above their target. Investors had fully priced in the cut as recently as last month, wagering that weakness in the labor market would outweigh price pressures.
Yields moved higher by about two to three basis points across the curve, the dollar fell for the sixth time in the last seven sessions and the S&P 500 Index dipped more than 1.5%.
Treasuries fell and traders pulled back on bets that the Federal Reserve is set to bring down interest rates next month as policymakers cautioned against further reductions.
Odds of a December cut assigned by the market slipped below 50% as Fed officials signaled concern about inflation that remains above their target. Investors had fully priced in the cut as recently as last month, wagering that weakness in the labor market would outweigh price pressures.
Yields moved higher by about two to three basis points across the curve, the dollar fell for the sixth time in the last seven sessions and the S&P 500 Index dipped more than 1.5%.
October 28, 2025
SGH Insight
The RBA is likely to hold the cash rate at 3.6% on November 3-4, resisting pressure to cut despite a jump in unemployment, as Governor Michele Bullock signals caution against anchoring policy to one month’s data.
Progress on disinflation likely stalled in the third quarter, which if confirmed this week, will give the Bank pause despite broad labor market softening expected by the RBA.
In our last report (see SGH 10/2/25; “RBA: Backed Off, Not Abandoned”), we said the RBA had stepped back from a November rate cut – not because the easing cycle has fully run its course, but because the Bank remains uneasy with the current inflation trajectory, making this more a pause in timing than a change in direction.
Market Validation
Progress on disinflation likely stalled in the third quarter, which if confirmed this week, will give the Bank pause despite broad labor market softening expected by the RBA.
In our last report (see SGH 10/2/25; “RBA: Backed Off, Not Abandoned”), we said the RBA had stepped back from a November rate cut – not because the easing cycle has fully run its course, but because the Bank remains uneasy with the current inflation trajectory, making this more a pause in timing than a change in direction.
RBA Leaves Cash Rate Target at 3.60%; Est. 3.60%
Bloomberg 11/4/25
In a statement after the November policy
meeting, the Reserve Bank of Australia said:
“The recent data on inflation suggest that some
inflationary pressure may remain in the economy. With private
demand recovering and labour market conditions still appearing a
little tight, the Board decided that it was appropriate to
maintain the cash rate at its current level at this meeting.
Financial conditions have eased since the beginning of the year,
but it will take some time to see the full effects of earlier
cash rate reductions. Given this, and the recent evidence of
more persistent inflation, the Board judged that it was
appropriate to remain cautious, updating its view of the outlook
as the data evolve.
Bloomberg 11/4/25
In a statement after the November policy
meeting, the Reserve Bank of Australia said:
“The recent data on inflation suggest that some
inflationary pressure may remain in the economy. With private
demand recovering and labour market conditions still appearing a
little tight, the Board decided that it was appropriate to
maintain the cash rate at its current level at this meeting.
Financial conditions have eased since the beginning of the year,
but it will take some time to see the full effects of earlier
cash rate reductions. Given this, and the recent evidence of
more persistent inflation, the Board judged that it was
appropriate to remain cautious, updating its view of the outlook
as the data evolve.
October 16, 2025
SGH Insight
Most ECB officials support keeping the policy rate at 2% over the coming meetings. They think disinflation depends now on the most volatile components, energy and food, while service inflation has been over 3% for more than three years. The GC unanimously supported holding rates in September despite the sharp Q2 slowdown. Scant margin for a downside surprise in Q3 raises the bar for a December cut, especially because the projections expect growth to pick up from Q4.
Market Validation
Bloomberg 10/30/25
The European Central Bank left interest rates unchanged for a third meeting, with inflation in check and the economy continuing to grow.
“The robust labor market, solid private sector balance sheets and the Governing Council’s past interest-rate cuts remain important sources of resilience,” the ECB said in a statement. “However, the outlook is still uncertain, owing particularly to ongoing global trade disputes and geopolitical tensions.”
Officials have been vocal of late in signaling that there’s little reason to add to the eight reductions in borrowing costs they’ve made to date. Their confidence stems from inflation that’s been hovering around the 2% goal for months and indications that the economic damage from Donald Trump’s trade measures has been relatively contained.
The European Central Bank left interest rates unchanged for a third meeting, with inflation in check and the economy continuing to grow.
“The robust labor market, solid private sector balance sheets and the Governing Council’s past interest-rate cuts remain important sources of resilience,” the ECB said in a statement. “However, the outlook is still uncertain, owing particularly to ongoing global trade disputes and geopolitical tensions.”
Officials have been vocal of late in signaling that there’s little reason to add to the eight reductions in borrowing costs they’ve made to date. Their confidence stems from inflation that’s been hovering around the 2% goal for months and indications that the economic damage from Donald Trump’s trade measures has been relatively contained.
October 27, 2025
SGH Insight
The issues the US is most eager to resolve are China’s tight controls over the export of rare earth elements and superhard materials, its imports of agricultural products such as soybeans and energy, including crude oil and LNG, and TikTok. The issues of greatest concern to China (as we have noted in various SGH reports) are the “Affiliates Rule,” port fees, fentanyl-related tariffs, and high-tech export controls.
Both delegations agreed to finalize the specific details and submit them respectively to Trump and Xi for review. The heads of state will confirm the final terms and announce their implementation at the summit on October 30.
If the talks proceed smoothly and the atmosphere in Gyeongju is good – and we have little reason to believe it will not be – our understanding is that Xi and Trump may have a working lunch on Thursday. And if China-US relations develop smoothly after the summit, President Trump is likely to be invited to visit China next spring, and President Xi is likely to be invited to the US next autumn.
Market Validation
Both delegations agreed to finalize the specific details and submit them respectively to Trump and Xi for review. The heads of state will confirm the final terms and announce their implementation at the summit on October 30.
If the talks proceed smoothly and the atmosphere in Gyeongju is good – and we have little reason to believe it will not be – our understanding is that Xi and Trump may have a working lunch on Thursday. And if China-US relations develop smoothly after the summit, President Trump is likely to be invited to visit China next spring, and President Xi is likely to be invited to the US next autumn.
Financial Times 10/30/25
Donald Trump and Xi Jinping have agreed to postpone export controls on rare earths and chips as part of a broad one-year trade deal reached by the US and Chinese leaders at a summit in South Korea.
The US and China said they also reached agreements on American tariffs related to fentanyl and tit-for-tat levies on each other’s shipping industries, as both leaders sought to ease tensions in their first meeting in six years.
Trump said the leaders had also discussed semiconductors, and that Nvidia would talk to China about exporting chips, but he said the discussions did not cover the most advanced microelectronics.
The president said he would visit China in April and that Xi would make a reciprocal visit to the US.
After the summit, China’s commerce ministry confirmed that Beijing had agreed to suspend the implementation of the rare earths export controls and that the US would suspend the extension of its technology-related export controls to subsidiaries of Chinese companies announced late last month, also for one year.
Donald Trump and Xi Jinping have agreed to postpone export controls on rare earths and chips as part of a broad one-year trade deal reached by the US and Chinese leaders at a summit in South Korea.
The US and China said they also reached agreements on American tariffs related to fentanyl and tit-for-tat levies on each other’s shipping industries, as both leaders sought to ease tensions in their first meeting in six years.
Trump said the leaders had also discussed semiconductors, and that Nvidia would talk to China about exporting chips, but he said the discussions did not cover the most advanced microelectronics.
The president said he would visit China in April and that Xi would make a reciprocal visit to the US.
After the summit, China’s commerce ministry confirmed that Beijing had agreed to suspend the implementation of the rare earths export controls and that the US would suspend the extension of its technology-related export controls to subsidiaries of Chinese companies announced late last month, also for one year.
October 6, 2025
SGH Insight
The BOJ’s path to 0.75% remains intact, but the timeline is slipping. Takaichi’s camp is steering expectations toward December, and the BOJ is unlikely to defy that signal with an October move and it lacks the conviction to push back.
Market Validation
BBG 10/30/25
Bank of Japan Governor
Kazuo Ueda mixed hawkish and dovish tones, keeping flexibility
to raise rates in either December or January after the central
bank left policy unchanged Thursday. He said confidence in the
BOJ’s outlook is increasing — a precondition for tightening —
hinting a December move is possible. He also stressed the
central bank makes its decisions independently of politics.
Bank of Japan Governor
Kazuo Ueda mixed hawkish and dovish tones, keeping flexibility
to raise rates in either December or January after the central
bank left policy unchanged Thursday. He said confidence in the
BOJ’s outlook is increasing — a precondition for tightening —
hinting a December move is possible. He also stressed the
central bank makes its decisions independently of politics.
August 11, 2025
SGH Insight
This period ranks among the most complicated setups for navigating the Fed that we have ever seen. Market participants are balancing multiple issues with contradictory outcomes for monetary policy:
The Fed is possibly heading in a direction that will require market participants to rethink how the Fed will behave. Fed watching could become a bean-counting exercise like the Bank of England, something likely to yield more volatile policy outcomes.
Market Validation
The Fed is possibly heading in a direction that will require market participants to rethink how the Fed will behave. Fed watching could become a bean-counting exercise like the Bank of England, something likely to yield more volatile policy outcomes.
"Divided US Fed backs second quarter-point rate cut of 2025"
AFP 10/29/25
The US Federal Reserve on Wednesday announced its second consecutive quarter-point rate cut to bolster the flagging labor market, unveiling a decision that highlighted the growing division in its ranks.
Policymakers voted 10-2 in favor of lowering the bank's key lending rate to between 3.75 percent and 4.00 percent, the Fed said in a statement.
Opposed to the action were Fed governor Stephen Miran, who backed a bigger half-point cut, and Kansas City Fed president Jeff Schmid, who "preferred no change to the target range for the federal funds rate at this meeting," the Fed said.
AFP 10/29/25
The US Federal Reserve on Wednesday announced its second consecutive quarter-point rate cut to bolster the flagging labor market, unveiling a decision that highlighted the growing division in its ranks.
Policymakers voted 10-2 in favor of lowering the bank's key lending rate to between 3.75 percent and 4.00 percent, the Fed said in a statement.
Opposed to the action were Fed governor Stephen Miran, who backed a bigger half-point cut, and Kansas City Fed president Jeff Schmid, who "preferred no change to the target range for the federal funds rate at this meeting," the Fed said.
October 24, 2025
SGH Insight
The BOC is likely to cut rates again this month, completing 75bps of easing this year. Sticky inflation persists, but deteriorating growth, weak consumption, and rising labor market slack are dominating the Bank’s focus.
With exports sagging, retail momentum fading, and investment restrained, the BOC appears intent on stabilizing the economy before deciding next year whether a more overtly stimulative stance is warranted.
Market Validation
With exports sagging, retail momentum fading, and investment restrained, the BOC appears intent on stabilizing the economy before deciding next year whether a more overtly stimulative stance is warranted.
Dow Jones - OTTAWA 10/29/25
The Bank of Canada cut its policy rate for the fourth time this year, to 2.25%, and signaled it might leave rates unchanged for the foreseeable future to aid an economy struggling under the weight of U.S. tariffs.
"If the economy evolves roughly in line with the outlook," Macklem said, "the governing council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment." The central bank sets interest rates to achieve and maintain 2% inflation.
The Bank of Canada cut its policy rate for the fourth time this year, to 2.25%, and signaled it might leave rates unchanged for the foreseeable future to aid an economy struggling under the weight of U.S. tariffs.
"If the economy evolves roughly in line with the outlook," Macklem said, "the governing council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment." The central bank sets interest rates to achieve and maintain 2% inflation.
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.
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