In the loop 23 March 2023

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.15/$, after closing stronger yesterday (R18.34/$*).
EM currencies were mixed yesterday; the CLP (+1.6%), ZAR (+1.3%) and MXN (+0.8%) were the biggest gainers; the THB (-0.3%), ARS (-0.2%) and PHP (-0.1%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are down, while the Hang Seng is up.

The US FOMC has hiked the Fed funds rate by 25 bps, as expected, and indicated further hikes, if needed.
This hike came despite the risk of exacerbating a banking crisis which has caused turmoil in global financial markets.
However, Fed Chair Jerome Powell noted that the FOMC had considered pausing in light of the banking crisis.
This increase marks the second consecutive 25 bps rate hike following a string of aggressive moves since March 2022.
Policymakers warned that the current turmoil may result in “tighter credit conditions for households and businesses and weigh on economic activity, hiring, and inflation”.
Still, the FOMC noted that the “the US banking system is sound and resilient”.
The Fed’s dot plot showed the median year-end projection for the Fed funds rate at 5.1%; the estimate for year-end 2024 is 4.3%.

The UK’s BOE is expected to hike its benchmark interest rate by 25 bps, to 4.25%, today.
UK CPI exceeded expectations, at 10.4% y/y in February, from 10.1% y/y in January.
Elevated inflation may add pressure on the BOE to keep raising rates despite tighter global financial conditions brought on by the collapse of the three US banks as well at the takeover of Credit Suisse.
Policymakers have been split for some time over how much further to raise rates given the headwinds to growth.

The Swiss National Bank (SNB) is likely to hike rates by 50 bps, to 1.5%, today.
The Turkish Central Bank is expected to hold rates steady, at 8.5% today.
Brazil’s central bank kept the Selic rate on hold at 13.75% yesterday.

Locally, the BER consumer confidence data for Q1:23 is scheduled for release today.
Confidence received a boost in Q4:22 as households anticipated better employment prospects and an improvement in their finances.
Indeed, consumer confidence improved to its strongest level in two years in Q4:22.
Eskom: Stage 2 loadshedding is currently in place until 4pm: Stage 3 will resume thereafter.

Brent crude oil is currently at $76.08/bbl; ($76.69/bbl*).
Gold is at $1977/oz ($1946/oz*).
SA CDS 294bps*, Brazil 246bps* and Turkey 546bps*.
Yields: US 10yr at 3.43%*, German bund at 2.32%* and SA 10-year generic at 10.77%*, SA’s R186 at 8.37%*.

* Denotes yesterday’s close.

Key events and data:

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