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In the loop 25 November 2022

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R17.01/$, after closing stronger yesterday (R17.02/$*).
  • EM currencies were mixed yesterday; the MYR (+1.8%), KRW (+1.8%) and THB (+1.4%) were the biggest gainers; the ARS (-0.5%), HUF (-0.3%) and MXN (-0.1%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei and Hang Seng are down, while the Shanghai Composite is up. 
  • The Turkish Central Bank has cut its one-week repo rate by 150 bps, to 9%, adhering to calls from President Recep Tayyip Erdogan to take interest rates into single digits by December.
  • Policymakers, however, plan to end the monetary easing cycle.
  • The bank noted that rates have reached “a sufficient level with regard to growing risks concerning global demand”.
  • Governor Sahap Kavcioglu commented that additional measures “supporting the effective transmission” of monetary policy would be implemented. 
  • The TRY has depreciated almost 29% against the dollar this year, the worst performer in emerging markets after the ARS.
  • The Riksbank has hiked its benchmark rate by 75 bps, to 2.5%, the highest since 2008.
  • This hike follows data that showed a wide range of goods and services becoming costlier, and at a faster pace than expected.
  • The bank signalled that further tightening would be needed to tame inflation even as it pencils in a worsening slump for Sweden’s economy. 
  • The bank lifted its CPI forecasts for next year and cut its GDP forecasts.
  • The German Q3:22 GDP (final estimate), due out today, is expected at 0.3% q/q, from 0.1% q/q in Q2:22.
  • The German IFO business outlook, out yesterday, rose from historically low levels as the risk of energy shortages this winter receded.
  • The government is preparing a wide range of measures to shield households and businesses from surging costs. 
  • The expectations gauge increased to 80 in November, from a revised 75.9 in October. 
  • Nonetheless, the index remains depressed as Germany braces for a recession due to the fallout from Russia’s war in Ukraine.
  • Locally, it’s a quiet day as far as data releases are concerned.
  • Eskom continues with Stage 2 loadshedding until 4pm and Stage 3 from 4pm until 5am tomorrow. 
  • Brent crude oil is up this morning, and up by 10.3% year-to-date.
  • The gold price is up this morning, and down by 3.8% year-to-date.
  • Brent crude oil is currently at $85.76/bbl; ($85.34/bbl*).
  • Gold is at $1758/oz ($1755/oz*).
  • SA CDS 249bps*, Brazil 258bps* and Turkey 530bps*.
  • Yields: US 10yr at 3.69%*, German bund at 1.85%* and SA 10-year generic at 10.71%*, SA’s R186 at 8.57%*.

* Denotes yesterday’s close. 

 Key events and data: 

  • It’s a quiet day.

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