Closing the loop 30 November 2021

Closing the loop

Shireen Darmalingam

Market highlights:

The rand is stronger, at R15.96/$ (R16.28/$*) today; it ranged between R15.95/$ and R16.24/$.
The currency is above its 50-day, 100-day and 200-day moving averages (R15.18/$, R14.90/$ and R14.63/$ respectively).
EM currencies were mixed today; the HUF (+1.5%), MXN (+1.5%) and PLN (+1.3%) were amongst the biggest gainers; the TRY (-1.8%), INR (-0.1%) and THB (-0.1%) were amongst the biggest losers.

Markets are digesting news regarding the efficacy of vaccines against the new Covid variant.
Moderna indicated today that its vaccine is proving to be less effective against the Omicron variant.
The European Medicines Agency said it would use expedited procedures to approve a new Covid vaccine to protect against the Omicron variant.

Eurozone CPI increased ahead of expectations by 4.9% /y in November from 4.1% y/y in October.
Surging energy costs was the primary driver in November; food inflation also surprised on the upside.
Statistical effects from changes in weightings also impacted on the headline number in November.
Today’s print will likely add to concerns about possible upside risks to the ECB’s inflation outlook; the ECB expects inflation to recede in 2022.

Locally, private sector credit extension undershot expectations in October coming in at 1.3% y/y from September’s 1.6% y/y.
M3 money supply grew by 2.0% y/y in April from an increase of 3.6% y/y in March.

The Q3:21 unemployment rate increased to a record 34.9% from 34.4% in Q2:21.
This was despite a 183,000 fall in the number of unemployed.
There were about 660,000 less people employed in Q3:21 compared to Q2:21.
The decline was dominated by fall in formal non-agricultural employment.
The number of discouraged work-seekers increased by 545,000 in Q3:21 while the number of not economically active increased by 443,000.
The unemployment rate according to the expanded definition increased to 46.6% in Q3:21 from 44.4% in Q2:21.

The SA trade balance fell slightly short of expectations in October, but closely matched ours, coming in at R19.8bn from R22.1bn in September.
Exports fell by 5.7% m/m while imports fell 4.9% m/m.
Exports of mineral products, vegetable products, chemical products and precious metals and stones declined, while vehicles and transport equipment increased.
Imports of mineral products, chemical products and vehicles and transport equipment declined while machinery and electronics and base metals picked up in October.
On a YTD basis, the trade surplus is at R370bn from R203bn in the comparable period in 2020.
Exports are 32.4% y/y higher in the year to date, while imports are 21.5% higher.

The BER’s manufacturing PMI for November is due tomorrow and is expected to have slipped marginally to 53.3 pts from 53.6 pts in October.
November Naamsa vehicle sales likely increased by 6.3% y/y, from October’s increase of 6.1% y/y.

SA CDS is at 246bps (242bps), lower than Brazil 264bps (261bps*) and Turkey 509bps (504bps*).
Yields: US 10yr at 1.42% (1.49%*), German bund at -0.355% (-0.317%*) and SA 10-year generic at 10.16% (10.23%*), SA’s R186 is at 8.02% (8.11%*).
The JSE ALSI is up by 0.7% today (+2.0%*).

* Denotes yesterday’s close.

Key events and data:

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