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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.
  • The oil price is down by 2.3% today, and down by 5.8% in the year-to-date.
  • The gold price is up by 2.0% today, and up by 4.5% in the year-to-date.
  • 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:

  • 09h00: UK ILO unemployment rate (January)
  • 11h30: SA mining production (January)
  • 12h00: US NFIB Small Business Optimism
  • 13h00: SA manufacturing production (January)
  • 14h30: US CPI (February)

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