In the loop
Shireen Darmalingam
What you should know this morning:
- The rand is weaker this morning, at R17.20/$, after closing stronger yesterday (R17.13/$*).
- EM currencies were mixed yesterday; the CLP (+1.5%), ZAR (+1.4%) and PHP (+0.9%) were the biggest gainers; the ARS (-0.2%), KRW (-0.2%) and HKD (-0.2%) were the biggest losers.
- Asian equity markets are mixed this morning; the Nikkei is down, while the Hang Seng and Shanghai Composite are up.
- Chinese stocks have gained on the back of the further relaxation of China’s Covid curbs.
- The dollar weakened yesterday on concerns that US recessionary worries may prompt the Fed to pause the hiking cycle.
- Investors have become increasingly concerned that high US inflation and rising interest rates could bring about a recession in 2023.
- Still, the Fed is largely expected to hike rates by a 50 bps at the final FOMC meeting of the year next week.
- The Fed has warned, however, that the Fed funds rate could peak at higher-than-expected levels.
- Central bank watch: the Bank of Canada (BOC) has hiked rates aggressively for a 6th consecutive time; the benchmark rate was raised by 50 bps, to 4.25%, the highest since 2008.
- Policymakers noted that recent rate increases have helped to cool domestic demand.
- The bank has hinted at a pause in the rate hiking cycle.
- Poland kept its benchmark rate unchanged at 6.75% and reinforced the notion that a cut may be on the cards, although likely only late next year.
- Brazil has kept its Selic rate steady, at 13.75%.
- This follows a tightening cycle adding 11.75 percentage points to borrowing costs.
- Peru has hiked its benchmark interest rate by 25 bps, to a 21-year high of 7.5%.
- Locally, the BER’s consumer confidence for Q4:22 likely deteriorated to -25, from -20 in Q3:22.
- The Q3:22 current account is expected to have narrowed to a deficit of 0.8% of GDP, from a deficit of 1.3% of GDP in Q2:22.
- Stats SA will release the manufacturing production data for October today; output is expected to have increased by 5.6% y/y, after having increased by 2.9% y/y in September.
- On a m/m basis, though, production likely contracted by 0.4%.
- Eskom: Stage 6 loadshedding will continue until 5am tomorrow; Stage 5 loadshedding will follow thereafter.
- Brent crude oil is up this morning, and up by 0.1% year-to-date.
- The gold price is unchanged this morning, and down by 2.5% year-to-date.
- Brent crude oil is currently at $77.87/bbl; ($77.17/bbl*).
- Gold is at $1783/oz ($1783/oz*).
- SA CDS 269bps*, Brazil 247bps* and Turkey 536bps*.
- Yields: US 10yr at 3.41%*, German bund at 1.78%* and SA 10-year generic at 11.09%*, SA’s R186 at 8.90%*.
* Denotes yesterday’s close.
Key events and data:
- 10h00: SA BER consumer confidence (Q4:22)
- 11h00: SA current account balance (Q3:22)
- 13h00: SA manufacturing production (October)
- 15h30: US initial jobless claims (3 December)
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