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Closing the loop 22 November 2022

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is stronger at R17.31/$ (R17.33/$*) today; it ranged between R17.24/$ and R17.36/$.
  • The currency is below its 50-day and 100-day moving averages (R17.86/$ and R17.37/$) and above its 200-day moving average (R16.40/$).
  • EM currencies are mixed today; the CLP (+0.8%), HUF (+0.6%) and COP (+0.5%) are the biggest gainers; the ARS (-0.8%), BRL (-0.5%) and HKD (-0.2%) are the biggest losers.
  • The OECD published its economic outlook today; global growth is expected to slow further in 2023, to 2.2% from 3.1% in 2022.
  • This comes on the back of the Russia-Ukraine war and the impact that it has had on pushing up inflation and the consequent monetary policy tightening across the globe.
  • US GDP growth is pencilled in at 1.8% in 2022 (from 1.5% previously) and 0.5% in 2023 (unchanged from its previous estimate); growth is expected to recover to 1% in 2024.
  • Eurozone growth is expected at 3.3% in 2022 (from 3.1% previously); growth of 0.5% is pencilled in for 2023 (from 0.3% previously).
  • It noted that the UK’s growth prospects are the worst among the G7; GDP growth is expected to contract by 0.4% in 2023 (from 4.4% in 2022) and expand by 0.2% in 2024.
  • Growth in China is estimated at 3.3% this year and 4.6% in 2023; Russia will likely contract by 5.6% in 2023, the most amongst the G20 countries.
  • The OECD expects growth in SA to come in at 1.7% in 2022, 1.1% in 2023 and 1.6% in 2024.
  • Inflation in OECD countries are expected at 6.6% in 2023 and 5.1% in 2024.
  • The agency noted that fighting inflation needs to be a top priority going into 2023 with further monetary policy tightening noted as “essential”.
  • The OECD noted that the ECB will have to raise interest rates much further if it wants to bring persistently high inflation closer to the bank’s target.
  • The Eurozone consumer confidence for November is scheduled for release later today.
  • Consumer confidence is expected to have improved somewhat, albeit still remaining in negative territory, to -26 from -27.6 in October.
  • Locally, the SARB’s leading indicator for September increased to 125.0 from 123.4 in August.
  • The largest positive contributors were an acceleration in the 6-month smoothed growth rate of job advertisement space and an increase in the number of residential building plans approved.
  • The largest detractors were a decrease in the 6-month smoothed growth rate of new passenger vehicle sales and slower y/y growth in the composite leading business cycle indicator for SA’s main trading partners.  
  • The coincident indicator, which measures current economic conditions, increased to 97.5 in August from 96.7 in July.
  • The lagging indicator increased to 98.4 in August from 97.4 in July.
  • Eskom: Stage 4 loadshedding continues until 5am tomorrow; Stage 2 will be implemented at 5am tomorrow until 4pm.
  • This cycle is expected until further notice.
  • The oil price is up by 1.6% today, and up by 14.2% in the year-to-date.   
  • The gold price is up by 0.4% today, and down by 4.7% in the year-to-date.
  • Brent crude oil is at $88.82/bbl ($87.45/bbl*).
  • Gold price is at $1743/oz ($1736/oz*). 
  • SA CDS is at 263bps (269bps*), Brazil 265bps (267bps*), Turkey 580bps (594bps*).
  • Yields: US 10yr at 3.79% (3.82%*), German bund at 2.00% (1.99%*) and SA 10-year generic at 10.87% (10.92%*), SA’s R186 is at 8.63% (8.71%*).
  • The JSE ALSI is up by 0.4% today (-0.9%*).

* Denotes yesterday’s close. 

Key events and data:

  • 10h00: SA CPI (October)
  • 11h00: Eurozone S&P manufacturing, services and composite PMI (November)
  • 11h30: UK S&P manufacturing, services and composite PMI (November)
  • 14h00: US MBA mortgage applications (18 November)
  • 15h30: US durable goods orders (October), initial jobless claims (19 November)
  • 16h45: US S&P manufacturing, services and composite PMI (November)
  • 17h00: US University of Michigan sentiment, 1 yr and 5-10 yr inflation expectations (November – final), new home sales (October)
  • 21h00: US FOMC meeting minutes (2 November)

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