In the loop 09 March 2023

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.58/$, after closing weaker yesterday (R18.59/$*).
EM currencies were mixed yesterday; the BRL (+1.0%), MXN (+0.7%) and CNY (+0.1%) were the biggest gainers; the KRW (-1.6%), THB (-1.5%) and MYR (-1.2%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Hang Seng are up, while Shanghai Composite is down.

US Fed Chair Jerome Powell commented yesterday that the bank has made no decision on the size of a rate increase later this month.
Powell reiterated that the size of the March hike would depend on incoming jobs and inflation reports.
However, the Fed will probably hike more and potentially faster if the data warranted it.
Several economic reports revealed that hiring, spending and inflation were stronger in January than expected.

Japan’s GDP growth was revised down to 0.1% q/q (annualised) in Q4:22, compared to the 0.6% released in preliminary figures.
The data points to continued economic weakness as inflationary pressure and a global economic slowdown clouds the outlook.
Weaker consumer spending was the main driver behind the downward revision.
Private consumption rose by less than expected, with household sentiment dampened by rising inflation.
The Bank of Japan (BOJ) meets tomorrow; it is largely expected to keep the benchmark policy rate unchanged.

China’s CPI moderated to 1.0% y/y in February, from 2.1% y/y in January; this comes as food and consumer goods costs eased after the Lunar New Year holiday.
Core CPI eased to 0.6% y/y in February, from 1% y/y in January.
The data suggests that inflation won’t be a concern for policymakers in the near term.
PPI declined by 1.4% y/y in February, after having declined by 0.8% y/y in January.

The Bank of Canada (BOC) has kept its benchmark interest rate unchanged (for the first time in 9 months), at 4.5%.
This is the first pause among major central banks.
The BOC noted that it is still weighing whether further rate hikes will be required to fight inflation.
Policymakers noted that they are willing to raise rates again if necessary.

Locally, the current account balance is due out today; a deficit of 2.5% of GDP for Q4:22 is expected, from a deficit of 0.3% of GDP in Q3:22.
Eskom: Stage 4 loadshedding is in place until further notice.

Brent crude oil is currently at $82.70/bbl; ($82.66/bbl*).
Gold is at $1815/oz ($1815/oz*).
SA CDS 245bps*, Brazil 218bps* and Turkey 515bps*.
Yields: US 10yr at 3.99%*, German bund at 2.64%* and SA 10-year generic at 10.87%*, SA’s R186 at 8.57%*.

* Denotes yesterday’s close.

Key events and data:

Read PDF