In the loop 17 January 2023

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is unchanged this morning, at R17.04/$, after closing weaker yesterday (R17.04/$*).
EM currencies were mixed yesterday; the IDR (+0.7%), PHP (+0.6%) and KRW (+0.5%) were the biggest gainers; the ZAR (-1.3%), BRL (-1.0%) and HUF (-0.7%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng and Shanghai Composite are down.

The World Economic Forum's (WEF) annual meeting has begun with business leaders and economists warning of a global recession this year.
A PricewaterhouseCoopers survey highlighted that 73% of 4,410 business leaders polled expect global growth to decline over the coming year.
This is the worst outcome since the survey began in 2011.
In addition, 2 out of 5 expressed concern that their companies may not see through a decade.
Another survey polling views of chief economists noted that two-thirds expect a global recession.

China’s economy in 2022 grew at the second-slowest pace since the 1970s.
China kept to its “Covid Zero” policy for most of 2022, which dampened output across the nation.
GDP growth came in at 3% in 2022, against expectations of 2.7%.
This economy expanded by 2.9% y/y in Q4:22, from 3.9% y/y in. Q3:22.
Despite the slowdown, the data was better than forecast in Q4:22.
This, together with the December economic data, adds to optimism that China’s economy is on the way to recovery.
Policymakers have indicated prioritising economic growth in 2023; we could see more fiscal and monetary stimulus on the cards.

The ECB’s Pablo Hernandez de Cos commented yesterday that big interest rate increases would continue as officials look to further bring down inflation in the bloc.
Rates are expected to rise to a level allowing the bank to ensure inflation returns to target.
De Cos noted that “future interest-rate decisions will continue to be data driven and will follow a meeting-by-meeting approach”.
Several central bank policymakers on both sides of the Atlantic have indicated that interest rates would probably stay higher for longer than markets expected.

The US Empire manufacturing survey for January is due out today.
Manufacturers are likely to see activity still in contraction as weaker demand for goods, higher costs and rising interest rates take a toll.

Locally, the mining production data for November is scheduled for release today and is likely to reflect a further contraction.
Mining production is expected to have declined by 3.2% m/m and 6.5% y/y in November, after having fallen by 2.5% m/m and 10.4% y/y in October.
Eskom: Stage 4 loadshedding is currently in place until 4pm; Stage 5 loadshedding will resume then until 5am on Wednesday.
Eskom noted that 14 generators are expected to return to service this week, which would ease the pressure on the power system.

Brent crude oil is currently at $84.69/bbl; ($84.46/bbl*).
Gold is at $1910/oz ($1913/oz*).
SA CDS 250bps*, Brazil 239bps* and Turkey 564bps*.
Yields: US 10yr at 3.50%*, German bund at 2.17%* and SA 10-year generic at 10.53%*, SA’s R186 at 8.25%*.

* Denotes yesterday's close.

Key events and data:

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