Closing the loop

Market highlights:

• The rand is weaker at R17.17/$ (R17.13/$*) today; it ranged between R17.09/$ and R17.23/$.
• The currency is below its 50-day and 100-day moving averages (R17.73/$ and R17.40/$) and above its 200-day moving average (R16.52/$).
• EM currencies are mixed today; the THB (+0.8%), KRW (+0.3%) and PLN (+0.2%) are the biggest gainers; the HUF (-1.6%), RUB (-0.4%) and ZAR (-0.2%) are the biggest losers.

• Mexico’s CPI moderated more than expected in November to 7.8% y/y from 8.41% y/y in October.
• Core CPI, however, increased to 8.51% y/y from 8.42% y/y in October, and well above the central bank’s 3% +/-1 percentage point target.
• The persistent increase in core prices may put pressure on the central bank to continue raising rates to fight inflation.

• US initial jobless claims increased by 230K in the week ending 3 December from an increase of 226k in the previous week.
• Investors are keeping a close eye on the strength of the labour market and what it could mean for inflation and how the Fed responds to price pressures.

• Locally, the current account deficit narrowed in Q3:22 to 0.3% of GDP from a downwardly revised deficit of 1.6% of GDP in Q2:22.
• The deficit was the 2nd consecutive one and suggests that the annual balance may swing into deficit following two years of surpluses.
• The better-than-expected deficit was driven by a shortfall on the services, income and current transfer payments which narrowed to R251bn in Q3:22 from R358bn in Q2:22.
• The trade surplus narrowed to R233bn in Q3:22 from R252bn in Q2:22; the value of both merchandise exports and imports increased to record highs in Q3:22.  

• The Q4:22 BER consumer confidence improved to -8 pts from -20 pts in Q3:22; consumer sentiment, however, remains depressed.
• The improvement comes on the back of all three sub-components of the index increasing in the final quarter.
• The household financial prospects sub-index recovered to 13 in Q4:22 from -2 in Q3:22; the sub-index measuring the appropriate time to buy durable goods also improved in Q4:22, albeit remaining in negative territory.
• The economic outlook index also gained during the quarter, to -19 in Q4:22 from -31 in Q3:22.
• Confidence levels among high-income and middle-income households increased while confidence among the low-income households deteriorated in Q4:22.

• Manufacturing production undershot expectations in October coming in at 1.0% y/y from an increase of 2.9% y/y in September.
• Production was down by a massive 6.3% m/m in October after having increased by 5.0% m/m in September.

• SA received a EUR10 million grant from the German development bank Kfw today.
• The funds are expected to be used to build a wind turbine and is part of Germany’s commitment to SA through the Just Energy Transition Partnership (JETP).
• International partners at COP26 (in 2021) committed to supporting SA in its efforts to decarbonise the economy; most emissions emanate from the energy sector and is dominated by Eskom.
• Eskom: Stage 6 loadshedding continues until 5am tomorrow; Stage 5 follows then.

• The oil price is up by 1.4% today, and up by 0.6% in the year-to-date.   
• The gold price is up by 0.3% today, and down by 2.2% in the year-to-date.

• Brent crude oil is at $78.27/bbl ($77.17/bbl*).
• Gold price is at $1788/oz ($1783/oz*). 
• SA CDS is at 265bps (269bps*), Brazil 245bps (247bps*), Turkey 538bps (536bps*).
• Yields: US 10yr at 3.44% (3.41%*), German bund at 1.80% (1.78%*) and SA 10-year generic at 11.00% (11.09%*), SA’s R186 is at 8.83% (8.90%*).
• The JSE ALSI is up by 0.6% today (-0.7%*).

* Denotes yesterday’s close. 

Key events and data:

• 03h30: China PPI, CPI (November)
• 15h30: US PPI (November)
• 17h00: US wholesale inventories (October – final)
• 17h00: US University of Michigan consumer sentiment index, 1 yr and 5-19 yr inflation expectations (December)

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