In the loop 22 March 2023

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.53/$, after closing weaker yesterday (R18.58/$*).
EM currencies were mixed yesterday; the HUF (+2.0%), CZK (+1.3%) and PLN (+0.8%) were the biggest gainers; the RUB (-0.6%), THB (-0.6%) and ZAR (-0.4%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

The US FOMC concludes its two-day meeting today; the committee is expected to hike the Fed funds rate by 25 bps.
Rate expectations have swung sharply over the past week from a 50 bps prior to the collapse of SVB, to a pause as financial market turmoil intensified around Credit Suisse.
The bank needs to decide whether to raise rates in the face of a banking crisis or pause on rates despite elevated inflation.
Investors will also keep an eye on the new dot plot which is likely to reflect a higher peak rate.

US Treasury Secretary Janet Yellen commented that US regulators may act to protect bank depositors if smaller lenders are threatened in the banking crisis.
Yellen further commented that the US government "is resolutely committed" to mitigating financial stability risks where necessary.

The UK CPI for February, scheduled for release today, likely moderated to 9.9% y/y, from 10.1% y/y in January.
On a m/m basis, CPI likely increased by 0.6% in February, after having fallen by 0.6% in January.
Core CPI likely moderated in February, to 5.7% y/y, from 5.8% y/y in January.
The forecast risk is larger than usual due to the annual reweighting of the CPI basket, which is updated in February.
The BOE will keep a close eye on the data ahead of its monetary policy decision tomorrow; a 25 bps rate hike is expected.
The UK house price index for January is also on the cards today.

Locally, the February CPI is expected to have moderated to 6.8% y/y, from 6.9% y/y in January.
On a m/m basis, CPI is likely to have increased by 0.6% in February, after having declined by 0.1% in January.
Core CPI is expected to have increased to 5.0% y/y in February, from 4.9% y/y.
The SARB’s leading indicator for January is also scheduled for release today.
Eskom suspended loadshedding yesterday on the back of reduced demand and an improvement in generation capacity.
Stage 2 loadshedding resumed today; Stage 3 will be implemented at 4pm.

Brent crude oil is currently at $75.00/bbl; ($75.32/bbl*).
Gold is at $1939/oz ($1941/oz*).
SA CDS 295bps*, Brazil 254bps* and Turkey 537bps*.
Yields: US 10yr at 3.60%*, German bund at 2.29%* and SA 10-year generic at 10.75%*, SA’s R186 at 8.33%*.

* Denotes yesterday’s close.

Key events and data:

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