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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 up this morning, and down by 3.7% year-to-date.
  • The gold price is unchanged this morning, and down by 0.5% year-to-date.
  • 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: 

  • 08h00: Japan machine tool orders (February)
  • 11h00: SA current account balance (Q4:22)
  • 15h30: US initial jobless claims (4 March)

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