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Closing the loop 12 August 2022

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is weaker at R16.24/$ (R16.20/$*) today; it ranged between R16.16/$ and R16.30/$.
  • The currency is below its 50-day moving average (R16.41/$) and above its 100-day and 200-day moving averages (R15.91/$ and R15.68/$).
  • EM currencies are mixed today; the BRL (+0.9%), COP (+0.7%) and IDR (+0.7%) are the biggest gainers; the CZK (-0.8%), BGN (-0.7%) and PHP (-0.6%) are the biggest losers.
  • UK GDP contracted by 0.1% q/q in Q2:22 after having increased by 0.8% q/q in Q1:22.
  • The contraction was driven by a decline in household spending well as Covid-related spending; manufacturing also fell in Q2:22.
  • The retail sector saw a 1% decline in Q2:22, reflecting inflationary pressures and global supply chain disruptions. 
  • GDP is expected to rebound temporarily in Q3:22.
  • The BOE last week announced that the 4-decade high inflation could tip the economy into a recession in Q4:22.
  • Russian GDP for Q2:22 is due out later today and is expected to have contracted by 4.7% q/q in Q2:22, from an increase of 3.5% q/q in Q1:22.
  • Eurozone industrial production increased to its highest level since 2017 in June; it increased by 2.4% y/y following an increase of 1.6% y/y in May.
  • The increase was driven by an improvement in the production of capital goods.
  • Today’s data suggests that the supply chain problems that have held back production may be easing.
  • The outlook for manufacturers, however, remains concerning on the back of weakening demand.
  • The US University of Michigan sentiment index overshot expectations in August coming in at a 3-month high of 55.1 from 51.5 in July.
  • The breakdown reflects that current assessments are down while the expectations component improved in August.
  • Inflation expectations were mixed.
  • Locally, it was a quiet day as far as data releases were concerned.
  • The oil price is down by 2.3% today, and up by 25.1% in the year-to-date.   
  • The gold price is up by 0.1% today, and down by 2.0% in the year-to-date.
  • Brent crude oil is at $97.36/bbl ($99.60/bbl*).
  • Gold price is at $1792/oz ($1788/oz*). 
  • SA CDS is at 237bps (228bps*), Brazil 252bps (240bps*), Turkey 660bps (646bps*).
  • Yields: US 10yr at 2.85% (2.88%*), German bund at 0.96% (0.97%*) and SA 10-year generic at 10.34% (10.42%*), SA’s R186 is at 8.54% (8.53%*).
  • The JSE ALSI is down by 0.7% today (+2.2%*).

* Denotes yesterday’s close. 

Key events and data:

  • On Monday: 01h50: Japan GDP (Q2:22)
  • 03h30: China new home prices (July),
  • 04h00: China industrial production, retail sales (July)
  • 06h30: Japan industrial production, capacity utilisation (June)
  • 14h30: US Empire manufacturing (August)
  • 16h00: US NAHB housing market index (August)

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