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Standard Bank Group
Closing the loop 18 May 2022

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is weaker at R15.95/$ (R15.92/$*) today; it ranged between R15.88/$ and R16.00/$.
  • The currency is above its 50-day, 100-day and 200-day moving averages (R15.23/$, R15.30/$ and R15.23/$).
  • EM currencies are mixed today; the RUB (+1.1%), KRW (+0.7%) and HUF (+0.6%) are the biggest gainers; the TRY (-0.8%), COP (-0.7%) and BRL (-0.6%) are the biggest losers.
  • UK CPI increased to 9.0% y/y in April from 7.0% y/y in March.
  • On a m/m basis, CPI was up by 2.5% in April from an increase of 1.1% in March.
  • The main driver of the April increase was a 47% increase in household utility prices.
  • This reflected a hike in the energy price cap set by the energy regulator in February.
  • Services inflation, driven by restaurants and hotels, increased in April.
  • Eurozone CPI remained steady at 7.4% y/y in April; CPI increased by 0.6% m/m in April, the same as in March.
  • CPI was once again driven by higher food and fuel prices in April.
  • Supply-chain bottlenecks and the knock-on effects of the Russia-Ukraine war have contributed to higher prices.
  • Today’s data will likely support the case for the ECB to hike interest rates at the July policy meeting.
  • The minutes of the ECB’s April MPC meeting are due for release tomorrow.
  • Locally, the April CPI remained steady at 5.9% y/y.
  • On a m/m basis, CPI increased by 0.6% from a 1.0% increase in March.
  • Core CPI, which excludes food and energy, increased to 3.9% y/y in April from 3.8% y/y in March.
  • The April print was driven by higher food and fuel prices.
  • We expect the SARB to hike the repo rate by 50 bps at the MPC meeting tomorrow.
  • March retail sales undershot expectations increasing by 1.3% y/y from a contraction of 0.9% y/y in February.
  • On a m/m basis, sales declined by 0.3% in March from a fall of 2% in February.
  • Stage 2 loadshedding will be implemented from 17h00 until 22h00 due to capacity constraints.
  • The oil price is up by 0.1% today, and up by 44.1% in the year-to-date.
  • The gold price is down by 0.5% today, and down by 0.9% in the year-to-date.
  • Brent crude oil is at $112.02/bbl ($111.93/bbl*).
  • Gold price is at $1812/oz ($1821/oz*). 
  • SA CDS is at 266bps (263bps*), Brazil 240bps (239bps*), Turkey 709bps (704bps*).
  • Yields: US 10yr at 2.95% (2.98%*), German bund at 1.056% (1.046%*) and SA 10-year generic at 10.40% (10.40%*), SA’s R186 is at 8.36% (8.38%*).
  • The JSE ALSI is down by 0.9% today (+0.7%*).

* Denotes yesterday close. 

Key events and data:

  • 01h50: Japan trade balance (April)
  • 10h00: Eurozone ECB current account balance (March)
  • 13h30: Eurozone ECB MPC minutes (April meeting)
  • 14h30: US initial jobless claims (14 May)
  • 15h00: SA SARB MPC interest rate decision – 50 bps increase expected
  • 16h00: US existing homes sales (April), leading index (April)

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