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Closing the loop 17 March 2023

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is stronger at R18.39/$ (R18.44/$*) today; it ranged between R18.25/$ and R18.45/$.
  • The currency is above its 50-day, 100-day and 200-day moving averages (R17.74/$, R17.55/$ and R17.33/$).
  • EM currencies are mixed today; CZK (+0.5%), KRW (+0.8%) and MXN (+0.6%) are the biggest gainers; the BRL (-0.6%), CLP (-0.3%) and ARS (-0.2%) are the biggest losers.
  • Eurozone CPI for January (final estimate) came in at 8.5% y/y in February from 8.6% y/y in January.
  • Core CPI, which excludes the more volatile categories of food and energy, increased to 5.6% y/y in February from 5.3% y/y in January.
  • The increase in core CPI is in line with projections presented by the ECB yesterday; the ECB noted that underlying inflationary pressures remain resilient.
  • A few hawkish ECB policymakers today reinforced the case for the ECB to continue hiking rates once the current financial market volatility eases.
  • The ECB hiked the benchmark interest rate by 50 bps yesterday; the policy committee, however, did not give any guidance on future policy moves.
  • The policymakers noted that the Eurozone economy would need another phase of tightening once the global turmoil fades.
  • OECD published its Interim Economic Outlook report today; the organisation raised its global growth forecast for this year to 2.6% from 2.2% in November.
  • US GDP growth is pencilled in at 1.5% in 2023 (up from 0.5% previously) and 0.9% in 2024 (down from 1.0% previously).
  • Eurozone growth is expected at 0.8% in 2023 (from 0.5% previously); growth of 1.5% is pencilled in for 2024 (from 1.4% previously).
  • Growth in China is estimated at 5.3% this year; the increase comes on the back of the reopening of the economy; growth is expected at 4.9% in 2024.
  • The OECD expects growth in SA to come in at 0.6% in 2023 and 0.9% in 2024.
  • The OECD expects inflation to moderate this year; the headline CPI forecast for the G20 countries was lowered to 5.9% in 2023 from a previous estimate of 6.0%.
  • The core inflation forecast for the G20 countries was increased to 3.9% in 2023 from a previous estimate of 3.6%.
  • The OECD noted that the Fed and ECB need to press ahead with interest rate increases to tame inflation and not be influenced by the current fragility and turmoil in the financial system.
  • Locally, it was a quiet day as far as data releases are concerned.
  • Eskom: Stage 2 loadshedding was implemented today and continues until further notice.
  • The oil price is down by 2.6% today, and down by 15.4% in the year-to-date.
  • The gold price is up by 2.0% today, and up by 7.1% in the year-to-date.
  • Brent crude oil is at $72.84/bbl ($74.70/bbl*).
  • Gold price is at $1954/oz ($1916/oz*). 
  • SA CDS is at 282bps (292bps*), Brazil 245bps (247bps*), Turkey 531bps (549bps*).
  • Yields: US 10yr 3.46% (3.57%*), German bund at 2.16% (2.29%*) and SA 10-year generic at 10.87% (10.92%*), SA’s R186 is at 8.42% (8.42%*).
  • The JSE ALSI is down by 0.2% today (0.0%*).

* Denotes yesterday’s close. 

Key events and data:

  • On Monday: 12h00: Eurozone trade balance (January)

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