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In the loop 13 March 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R18.20/$, after closing stronger on Friday (R18.31/$*).
  • EM currencies were mixed on Friday; the COP (+1.4%), BGN (+0.9%) and ZAR (+0.8%) were the biggest gainers; the MXN (-2.4%), BRL (-1.0%) and HUF (-0.5%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei is down, while the Hang Seng and Shanghai Composite are up. 
  • In the US, Tuesday's CPI data for February will be key in determining whether the FOMC will hike the Fed funds rate by 25 or 50 bps on 22 March.
  • Markets will keep a close eye on core services excluding housing, a measure closely watched by Fed Chair Jerome Powell.
  • A strong February CPI print would solidify a 50 bps hike at the next FOMC meeting; however, the market is currently pricing in a 25 bps hike at that meeting. 
  • The February PPI outcome is also due out this week.
  • US retail sales, due out on Wednesday, will likely have declined by 0.2% m/m, following January’s 3.0% m/m increase.
  • The Empire manufacturing survey for March, also due out on Wednesday, will likely reflect further modest declines in sentiment.
  • The NAHB housing market index for March may have drifted lower as mortgage rates have increased again.
  • The University of Michigan sentiment index, due out on Friday, is likely to have eased in March. 
  • The ECB is in the spotlight this week as it forges ahead with the fastest tightening cycle in the bank’s history.
  • The bank is expected to hike the benchmark interest rate by 50 bps on Thursday.
  • The focus will then shift to any signals from the Governing Council on the future course of rate hikes.
  • The Eurozone industrial production data for February is due out on Wednesday.
  • The UK unemployment rate for January, due out on Tuesday, likely increased to 3.8%, from 3.7% in December.
  • Russia’s central bank will likely keep rates steady (on Friday) but signal that the Board is ready to raise rates in April.
  • China’s industrial production and retail sales for February, due out on Wednesday, likely increased. 
  • Investment probably slowed, impacted by weakness in the housing sector.
  • The Bank Indonesia is expected to extend a pause on rates this week.
  • Locally, mining production for January, due out tomorrow, likely declined by 4.6% y/y, after having declined by 3.5% y/y in December.
  • Manufacturing production for January, also due out tomorrow, likely fell by 5.4% y/y, following a 4.7% y/y decline in December.
  • Retail sales for January, due out on Wednesday, is likely to have declined by 2.2% y/y; this follows a 0.5% y/y fall in December.
  • Eskom: Stage 4 loadshedding is currently in place until 4pm, when Stage 5 will resume.
  • Brent crude oil is up this morning, and down by 3.2% year-to-date.
  • The gold price is up this morning, and up by 3.1% year-to-date.
  • Brent crude oil is currently at $83.15/bbl; ($82.78/bbl*).
  • Gold is at $1880/oz ($1868/oz*).
  • SA CDS 261bps*, Brazil 224bps* and Turkey 525bps*.
  • Yields: US 10yr at 3.68%*, German bund at 2.50%* and SA 10-year generic at 10.88%*, SA’s R186 at 8.53%*.

* Denotes Friday’s close. 

 Key events and data: 

  • No major economic data releases are schedule for release today.

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