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In the loop 15 March 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is unchanged this morning, at R18.14/$, after closing stronger yesterday (R18.14/$*).
  • EM currencies were mixed yesterday; the MXN (+1.4%), HUF (+0.7%) and COP (+0.6%) were the biggest gainers; the RUB (-1.1%), KRW (-0.7%) and PLN (-0.5%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.
  • The People’s Bank of China (PBOC) has kept its one-year medium term lending facility rate at 2.75%, as expected.   
  • Following still elevated headline and core CPI data out of the US, traders have lifted their rate expectations somewhat for the upcoming FOMC meeting next week.
  • The market is pricing in a 25 bps hike; however, a pause on rates is still an option while the Fed waits for the dust to settle after the SVB collapse.
  • Despite the current financial market turmoil, the Fed remains highly focused on taming inflation and steering it back to the bank’s 2% inflation target.
  • The US February PPI outcome is due today.
  • US retail sales are likely to have declined by 0.4% m/m, following January’s 3.0% m/m increase.
  • The Empire manufacturing survey for March will likely reflect further modest declines in sentiment.
  • The NAHB housing market index for March may have drifted lower as mortgage rates have increased again.
  • The UK Spring Budget is in the spotlight today.
  • Chancellor Jeremy Hunt is likely to unveil economic growth forecasts which show a shallower recession and less borrowing in the near term. 
  • Hunt is likely to pledge to drive economic growth by unblocking business investment.
  • The UK economy, however, faces high inflation, weak growth, the cost-of-living crisis, strikes, and labour shortages.
  • The overall medium-term fiscal picture is likely to have improved marginally. 
  • Hunt is expected to extend free childcare to younger children as he seeks to get parents back into work.
  • The Eurozone industrial production for January, due out today, likely increased by 0.3% m/m, after having declined by 1.1% m/m in December.
  • Industrial production was likely supported by a rebound in Germany’s industrial output. 
  • German industrial production rose by 1.8% m/m in January, while the December reading was revised up and reflected a smaller decline than previously reported.
  • French industrial production declined by 1.5% m/m in January; Spanish industrial output was down by 0.9% m/m in January.
  • Locally, retail sales for January likely declined by 2.0% y/y; this follows a 0.6% y/y fall in December.
  • Eskom: Stage 3 loadshedding is currently in place until 4pm; Stage 4 loadshedding will resume from 4pm until 5am tomorrow. 
  • Brent crude oil is up this morning, and down by 8.8% year-to-date.
  • The gold price is down this morning, and up by 4.2% year-to-date.
  • Brent crude oil is currently at $78.33/bbl; ($77.45/bbl*).
  • Gold is at $1900/oz ($1906/oz*).
  • SA CDS 264bps*, Brazil 232bps* and Turkey 528bps*.
  • Yields: US 10yr at 3.67%*, German bund at 2.42%* and SA 10-year generic at 10.79%*, SA’s R186 at 8.41%*.

* Denotes yesterday’s close. 

 Key events and data: 

  • 12h00: Eurozone industrial production (January)
  • 13h00: SA retail sales (January)
  • 13h00: MBA mortgage applications (10 March)
  • 14h30: UK Chancellor presents Spring Budget to Parliament
  • 14h30: US PPI (February), Empire manufacturing (February), retail sales (February)
  • 16h00: US business inventories (January), NAHB housing market index (March)

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