In the loop 16 January 2023

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R16.76/$, after closing weaker on Friday (R16.82/$*).
EM currencies were mixed on Friday; the IDR (+1.2%), THB (+1.2%) and PHP (+0.7%) were the biggest gainers; the RUB (-1.2%), PEN (-0.7%) and ZAR (-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.

The World Economic Forum kicks off in Davos today.
The theme for this year’s gathering is “Cooperation in a Fragmented World” and will conclude on 20 January.
World leaders and business people, excluding those from Russia and Covid-hit China, are expected to discuss pressing issues such as the Russia-Ukraine war, global inflation, and climate change.

Data out of the Eurozone this week will likely confirm that headline inflation has passed the peak.
CPI for December (final estimate), due out on Wednesday, likely moderated to 9.2% y/y, from 10.1% y/y in November.
Inflation in the UK for December is also due and expected to have reflected a moderation.
CPI is expected at 10.5% y/y in December, from 10.7% y/y in November.
The German ZEW survey for January may indicate that some of the gloom is dissipating as the warmer-than-normal winter eases the risk of a severe energy crisis.

US markets are closed today for Martin Luther King Day.
The softer US CPI in December, together with favourable outcomes in the preceding two months, gives the Fed room to hike rates by smaller increments when meeting at the end of January.
PPI for December, due out on Wednesday, is expected to show a further deceleration in producer prices.
This may pave the way for further near-term disinflation in core CPI.
The Empire manufacturing survey for January is due out tomorrow.
Manufacturers are likely to see activity as still in contraction as weaker demand for goods, higher costs and rising interest rates take a toll.
Retail sales data for December is due out on Wednesday and is expected to have slipped further.
The NAHB housing market index for January is also scheduled for release this week.
Homebuilder sentiment deteriorated every month in 2022; a further deterioration is expected in January.

Japan’s CPI for December, due out on Friday, may reflect core inflation hitting 4%; this would be double the BOJ’s target.
Inflation is, however, expected to slow this year.
The BOJ will meet this week, and may hold on monetary policy.
The Bank of Indonesia is expected to raise rates by 25 bps this week.
Malaysia’s central bank is expected to hold rates steady this week.

Locally, the SARB’s BER inflation expectations survey is due out today.
Stats SA will release the mining production data for November tomorrow; a further m/m contraction is expected.
The December CPI is scheduled for release on Wednesday; CPI likely moderated to 7.3% y/y in December, from 7.4% y/y in November.
Retail sales data for November is due out on Wednesday.

Eskom will continue with Stage 6 loadshedding this week until further notice.
President Cyril Ramaphosa has cancelled his trip to Davos due to the ongoing electricity crisis.
Ramaphosa is convening a meeting with leaders of political parties represented in parliament, NECCOM (the National Energy Crisis Committee), and the Eskom board.

Brent crude oil is currently at $84.64/bbl; ($85.28/bbl*).
Gold is at $1919/oz ($1920/oz*).
SA CDS 246bps*, Brazil 243bps* and Turkey 555bps*.
Yields: US 10yr at 3.50%*, German bund at 2.16%* and SA 10-year generic at 10.43%*, SA’s R186 at 8.19%*.

* Denotes Friday’s close.

Key events and data:

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