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In the loop 20 January 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R17.28/$, after closing weaker yesterday (R17.32/$*).
  • EM currencies were mixed yesterday; the COP (+0.6%), RON (+0.5%) and KRW (+0.4%) were the biggest gainers; the MXN (-1.4%), ZAR (-1.2%) and RUB (-1.2%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.
  • Federal Reserve Vice Chair Lael Brainard has echoed other policymakers’ views that US interest rates would need to stay elevated for some time to further tame inflation. 
  • Brainard noted inflation as showing signs of slowing but still remaining too high.
  • Brainard, however, didn’t state her preference for the Fed slowing the magnitude of rate hikes to 25 bps at the next meeting.
  • She also discussed signs of cooling inflation and economic activity.
  • She suggested that jobs and prices could ease without a big loss of employment.
  • The FOMC interest rate decision is expected on 1 February.
  • The US housing market data, out yesterday, showed some signs of improving activity.
  • While housing starts and building permits slipped in December, the MBA mortgage applications index soared in the week ending 13 January.
  • Mortgage rates are also currently at their lowest level since September 2022, according to Freddie Mac.
  • This bodes well for buyers as the spring season kicks off.
  • Homebuilder sentiment also increased in January for the first time since the end of 2021.
  • Existing home sales data for December is scheduled for release today.
  • BOE Governor Andrew Bailey noted yesterday that it’s likely that CPI may have turned the corner following two months of declines.
  • Bailey commented that it’s a sign that the UK economy may be overcoming the worst of the cost-of-living squeeze.
  • He further noted that inflation could fall quite rapidly this year.
  • The GfK consumer confidence for January, out this morning, saw sentiment deteriorate, remaining in negative territory, at -45, from -42 in December.
  • The weaker-than-expected reading comes on persistently higher inflation and rising energy bills.
  • Locally, it’s a quiet day as far as data releases are concerned.
  • Eskom: Stage 4 loadshedding is currently in place until 4pm; Stage 5 loadshedding will resume then.
  • Brent crude oil is up this morning, and up by 0.4% year-to-date.
  • The gold price is up this morning, and up by 5.5% year-to-date.
  • Brent crude oil is currently at $86.26/bbl; ($86.16/bbl*).
  • Gold is at $1923/oz ($1920/oz*).
  • SA CDS 262bps*, Brazil 246bps* and Turkey 564bps*.
  • Yields: US 10yr at 3.39%*, German bund at 2.06%* and SA 10-year generic at 10.46%*, SA’s R186 at 8.20%*.

* Denotes yesterday’s close. 

 Key events and data: 

  • 09h00: UK retail sales (December)
  • 17h00: US existing homes sales (December)

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