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In the loop 19 January 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is weaker this morning, at R17.14/$, after closing weaker yesterday (R17.12/$*).
  • EM currencies were mixed yesterday; the THB (+0.8%), COP (+0.8%) and INR (+0.6%) were the biggest gainers; the BRL (-1.5%), CLP (-1.0%) and MXN (-0.7%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei and Hang Seng are down, while the Shanghai Composite is up.
  • The US Beige Book, released last night, characterized US economic activity as broadly unchanged or stagnant
  • About half of the 12 districts reported no change, or slight declines, in economy activity, and six reported slight to modest increases.
  • One of these districts reported a “significant decline”.
  • The report highlighted that while spending had increased somewhat, reports continued of elevated inflation pressuring real incomes, particularly among low-income households.
  • It was noted that manufacturing declined modestly; housing remains weak, and demand for services is stagnant.
  • Most districts reported expanding employment, although difficulties remain in filling open positions. 
  • Several Fed policymakers commented on monetary policy yesterday in the lead-up to the FOMC meeting at month-end.
  • St. Louis Fed President James Bullard and Cleveland Fed President Loretta Mester, known hawks, reiterated calls for further interest-rate increases.
  • They noted that signs that inflation is fading are evidence that the bank’s aggressive rate actions are working to tame inflation.
  • Officials commented that additional tightening would be necessary to ensure that the Fed can restore price stability.
  • The US housing starts and building permits for December are scheduled for release today.
  • Housing starts are likely to have declined in December; weaker demand is expected to drive construction lower this year.
  • Affordability is deteriorating, with many potential homebuyers cancelling deals and pulling out of the housing market. 
  • Locally, it’s a quiet day as far as data releases are concerned.
  • Eskom: Stage 4 loadshedding is currently in place until 4pm; Stage 5 loadshedding will resume then.
  • This is to continue until further notice.
  • Brent crude oil is down this morning, and down by 2.4% year-to-date.
  • The gold price is up this morning, and up by 4.7% year-to-date.
  • Brent crude oil is currently at $83.88/bbl; ($84.98/bbl*).
  • Gold is at $1909/oz ($1905/oz*).
  • SA CDS 247bps*, Brazil 236bps* and Turkey 545bps*.
  • Yields: US 10yr at 3.36%*, German bund at 2.02%* and SA 10-year generic at 10.35%*, SA’s R186 at 8.13%*.

* Denotes yesterday’s close. 

 Key events and data: 

  • 11h00: Eurozone ECB current account (November)
  • 15h30: US housing starts, building permits (December), initial jobless claims (14 January)

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