In the loop 24 November 2022

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R16.94/$, after closing stronger yesterday (R17.03/$*).
EM currencies were mixed yesterday; the ZAR (+1.4%), CLP (+1.3%) and PLN (+0.8%) were the biggest gainers; the THB (-0.5%), HUF (-0.3%) and CNY (-0.3%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Hang Seng are up, while the Shanghai Composite is down.

The Fed’s FOMC minutes of the November meeting conveyed that the Fed is poised to slow down the pace of rate hikes.
The minutes noted that it would "soon be appropriate" to reduce the pace of rate increases.
Fed Chair Jerome Powell and several other policymakers signalled that the bank may be hiking the Fed funds rate by 50 bps at the December FOMC meeting.
Various policymakers have noted the peak rate as likely "somewhat higher" than previously anticipated.
Several officials said that a slower upward pace would give the bank time to assess progress in the inflation fight.

Economists at the Fed flagged to the Fed that the chances of a US recession in the next year have risen to almost 50%.
This is expected due to a likely slowdown in consumer spending, the risk of further global economic setbacks, and further policy tightening.
This was the first recession warning to the FOMC since the committee started hiking rates in March.

Investors are likely to keep a close eye on the ECB MPC minutes due out today.
The minutes should offer some guidance on whether markets should brace for a 75 bps hike in December or whether the bank will hike by a lesser 50 bps.
The Riksbank today is expected to hike the benchmark rate by 75 bps, to 2.50%.
The Turkish central bank too will meet today and may cut the one-week repo rate by 150 bps, to 9.00%.
The bank has cut rates by 350 bps over three MPC meetings despite rising inflation.

The BOE’s Huw Pill noted yesterday that the bank needs to raise interest rates further to tackle inflationary pressures that are becoming increasingly domestic.
The BOE has already raised rates from 0.1% to 3% this year.
Inflation is currently at a four-decade high of 11.1% and more than five times the BOE’s 2% target.
Pill noted the main two drivers of rising inflation as being energy prices and job shortages.

Locally, the SARB will deliver its MPC rate decision today and is expected to have debated a hike of either 50 bps or 75 bps.
The October PPI is also scheduled for release today.
Eskom has implemented Stage 2 loadshedding until 4pm; Stage 4 loadshedding is expected at 4pm until 5am.

Brent crude oil is currently at $85.10/bbl; ($85.41/bbl*).
Gold is at $1754/oz ($1743/oz*).
SA CDS 249bps*, Brazil 261bps* and Turkey 555bps*.
Yields: US 10yr at 3.69%*, German bund at 1.93%* and SA 10-year generic at 10.78%*, SA’s R186 at 8.65%*.

* Denotes yesterday’s close.

Key events and data:

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