In the loop 05 December 2022

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R17.28/$, after closing stronger on Friday (R17.50/$*).
EM currencies were mixed yesterday; the IDR (+0.9%), PHP (+0.8%) and HUF (+0.7%) were the biggest gainers; the MXN (-1.2%), BRL (-0.5%) and BGN (-0.5%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei is down, while the Hang Seng and Shanghai Composite are up.

Shanghai has eased its Covid testing rules, joining Beijing, Shenzhen, Guangzhou, Zhengzhou and other cities in moving towards reopening their economies following recent protests.
Data out of China will likely highlight the damage from Covid restrictions as well as weakening external demand.
Imports and exports are expected to have fallen in November.
CPI for November is expected at 1.6% y/y, from 2.1% y/y in October; PPI likely slipped deeper into deflation.
Japan's revised Q3:22 GDP is due out on Thursday and Australia’s GDP for Q3:22 is due on Wednesday.

The ECB’s Francois Villeroy has commented that the bank should hike rates by 50 bps this month as it continues its inflation fight.
Villeroy noted that prices may peak only by H1:23; he pledged to bring CPI back to the bank’s 2% by no later than 2025.
Germany’s industrial production, due out on Wednesday, likely declined slightly.
Russia’s CPI for November is expected at 11.9% y/y, from 12.6% y/y in October.

US data this week will shed more light on inflation; Friday's PPI data for November will probably show both headline and core prices increasing at a pace nearly consistent with the Fed's 2% target.
Inflation expectations, due out on Friday, likely fell in November due to lower gasoline prices.
The ISM services index likely remained in expansion in November, albeit slipping somewhat.
The index is likely to have slipped to 53.5 in November, from 54.4 in October.

Locally, the industry-wide PMI for November, due out today, is expected to have increased to 50, from 49.5 in October.
Q3:22 GDP (due tomorrow) will likely register 0.4% q/q (sa), after having contracted by 0.7% q/q (sa) in Q2:22.
The SARB’s gross and net reserves are due out on Wednesday; both are expected to have improved in November.
The BER’s consumer confidence for Q4:22 (out on Thursday) likely deteriorated to -25, from -20 in Q3:22.
The Q3:22 current account, also due out on Thursday, likely narrowed to a deficit of 0.8% of GDP, from a deficit of 1.3% of GDP in Q2:22.
Stats SA will release both the mining and manufacturing data for October on Thursday.
Eskom: Stage 3 loadshedding has been implemented until 5am tomorrow; Stage 2 loadshedding will resume then.

The ANC’s NEC will meet today to discuss President Cyril Ramaphosa’s future after the Phala Phala report last week noted that the president might have acted illegally in the burglary cover-up at his farm.
The president has noted that it is up to the ANC executive to decide on his future.
The president however indicated that he is prepared to challenge section 89 of the report in the Constitutional Court.
The markets are likely to remain volatile due to these political uncertainties.

Brent crude oil is currently at $86.25/bbl; ($85.57/bbl*).
Gold is at $1808/oz ($1797/oz*).
SA CDS 268bps*, Brazil 239bps* and Turkey 512bps*.
Yields: US 10yr at 3.48%*, German bund at 1.85%* and SA 10-year generic at 11.33%*, SA’s R186 at 9.16%*.

* Denotes Friday’s close.

Key events and data:

09h15: SA industry-wide PMI (November)
11h00: Eurozone S&P Global services and composite PMI (November – final)
11h30: Eurozone Sentix investor confidence (December)
11h30: UK S&P Global services and composite PMI (November – final)
12h00: Eurozone retail sales (October)
16h45: US S&P Global services and composite PMI (November)
17h00: US factory orders (October), durable goods orders (October – final), ISM services index (November)

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