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Closing the loop 23 May 2022

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is stronger at R15.64/$ (R15.84/$*) today; it ranged between R15.64/$ and R15.90/$.
  • The currency is above its 50-day, 100-day and 200-day moving averages (R15.27/$, R15.29/$ and R15.25/$).
  • EM currencies are mixed today; the RUB (+7.7%), BRL (+1.7%) and PLN (+1.6%) are the biggest gainers; the ARS (-0.4%), IDR (-0.2%) and PHP (-0.1%) are the biggest losers.
  • It was a quiet day as far as data releases were concerned.
  • The S&P Global Eurozone PMI surveys for May are due out tomorrow and will likely provide an indication of the impact of the Russia-Ukraine war and flare-up in concerns about global growth.
  • Downside risks for the PMI emanate from the extended lockdown in China and the sharp decline in consumer confidence.
  • The manufacturing PMI is expected to have slipped to 54.7 pts in May from 55.5 pts in April.
  • The services PMI is also expected to have fallen in May. 
  • The composite PMI is likely to have slipped to 55.1 pts in May from 55.8 pts in April.
  • The UK PMI surveys are also due out tomorrow. 
  • The manufacturing PMI is likely to have slipped to 55 pts in May from 55.8 pts in April. 
  • The composite PMI may also move lower to 56.5 pts in May from 58.2 pts in April as the effect of rising taxes and soaring energy costs continues to weigh on activity.
  • The Nigerian central bank is expected to keep rates unchanged tomorrow.
  • Expectations are for rates to remain steady until H2:22.
  • US new home sales, due out tomorrow, likely fell for a 4th consecutive month in April.
  • New home sales are expected to have declined by 1.7% m/m in April after having declined by 8.6% m/m in March.
  • Completions of single-family homes declined in April while mortgage applications have declined on the back of a rapid increase in mortgage rates.
  • Locally, Stage 2 loadshedding will be implemented from 17h00 until 22h00 due to capacity constraints.
  • We look to the SARB’s leading indicator for March tomorrow; the index slipped marginally to 127.2 pts in February from 127.3 pts in January.
  • The oil price is down by 0.1% today, and up by 44.6% in the year-to-date.
  • The gold price is up by 0.4% today, and up by 1.4% in the year-to-date.
  • Brent crude oil is at $112.49/bbl ($112.55/bbl*).
  • Gold price is at $1854/oz ($1846/oz*). 
  • SA CDS is at 266bps (273bps*), Brazil 243bps (246bps*), Turkey 703bps (717bps*).
  • Yields: US 10yr at 2.82% (2.78%*), German bund at 0.984% (0.944%*) and SA 10-year generic at 10.17% (10.19%*), SA’s R186 is at 8.17% (8.19%*).
  • The JSE ALSI is up by 1.5% today (-1.0%*).

* Denotes Friday’s close. 

Key events and data:

  • 02h30: Japan Jibun Bank manufacturing, services and composite PMI (May)
  • 09h00: SA leading indicator (March)
  • 10h00: Eurozone S&P Global manufacturing, services and composite PMI (May)
  • 10h30: UK S&P Global manufacturing, services and composite PMI (May)
  • 15h45: US S&P Global manufacturing, services and composite PMI (May)
  • 16h00: US new homes sales (April)

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