Closing the loop 13 March 2023

Closing the loop

Shireen Darmalingam

Market highlights:

The rand is stronger at R18.20/$ (R18.31/$*) today; it ranged between R18.09/$ and R18.39/$.
The currency is above its 50-day, 100-day and 200-day moving averages (R17.64/$, R17.53/$ and R17.27/$).
EM currencies are mixed today; KRW (+1.8%), THB (+1.3%) and RUB (+1.2%) are the biggest gainers; the MXN (-1.8%), HUF (-1.4%) and CLP (-0.9%) are the biggest losers.

Markets are still reeling from the collapse of SVB last week; European equities have extended their decline following the failure of SVB.
HSBC has acquired the UK arm of SVB for GBP1 in a rescue deal; as such, British customers can continue to bank as usual as deposits are backed by the security and strength of HSBC.
The BOE commented today that the wider UK banking system “remains safe, sound, and well capitalised.”
Investors have also since then cut US rate expectations from a 50 bps bike in the Fed funds rate next week, to a 25 bps rate hike.
US regulators have noted that SVB depositors would be fully repaid as they unveiled emergency funding measures.
The Fed announced a new lending facility providing extra funding to eligible institutions to ensure that “banks have the ability to meet the needs of all their depositors.”
President Joe Biden is also due to speak about these emergency measures later today.

The US CPI data for February is due out tomorrow; CPI is expected to have moderated to 6.0% y/y in February from 6.4% y/y in January.
Core CPI is likely to have moderated to 5.5% y/y in February from 5.6% y/y in January.
Markets will keep a close eye on core services excluding housing, a measure closely watched by Fed Chair Jerome Powell.

The UK ILO unemployment rate for the 3 months to January, scheduled for release tomorrow, likely increased to 3.8%, from 3.7% in the 3 months to December.
Vacancies are expected to have continued declining, albeit still remaining high.
Wage gains are expected to have moderated to 6.6% in the 3 months to January from 6.7% in the 3 months to December.

Locally, mining production for January, due out tomorrow, likely declined by 2.8% y/y, after having declined by 3.5% y/y in December.
Manufacturing production for January, also due out tomorrow, likely fell by 5.2% y/y, following a 4.7% y/y decline in December.
Eskom: Stage 4 loadshedding continues until further notice.

Brent crude oil is at $80.97/bbl ($82.78/bbl*).
Gold price is at $1905/oz ($1868/oz*).
SA CDS is at 267bps (250bps*), Brazil 232bps (224bps*), Turkey 527bps (525bps*).
Yields: US 10yr 3.48% (3.69%*), German bund at 2.21% (2.50%*) and SA 10-year generic at 10.77% (10.88%*), SA’s R186 is at 8.39% (8.53%*).
The JSE ALSI is down by 1.3% today (-1.6%*).

* Denotes Friday’s close.

Key events and data:

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