Closing the loop 21 November 2022

Closing the loop

Shireen Darmalingam

Market highlights:

The rand is weaker at R17.34/$ (R17.25/$*) today; it ranged between R17.19/$ and R17.46/$.
The currency is below its 50-day and 100-day moving averages (R17.87/$ and R17.37/$) and above its 200-day moving average (R16.39/$).
EM currencies are mixed today; the BRL (+0.8%), COP (+0.6%) and HKD (+0.2%) are the biggest gainers; the HUF (-1.7%), THB (-1.3%) and KRW (-1.1%) are the biggest losers.

The market’s focus is on the US FOMC meeting minutes of the November meeting on Wednesday this week.
While consensus may have been reached with regards to the slowing pace of rate hikes, there may have been disagreements regarding the end point.
However, if policymakers interpret recent economic strength to suggest interest rates are not restrictive enough, the hiking cycle will likely be extended for longer.
We could also see the views of several policymakers having expressed concerns of the Fed overtightening policy.
As such the minutes could bolster talk of the Fed pivoting in 2023.
San Francisco Fed President Mary Daly is due to comment on the path to price stability later today.

ECB governing council member Bostjan Vasle has indicated today that the central bank may need to raise borrowing costs into restrictive territory.
Vasle noted that high inflation warrants a continuation of monetary policy normalisation.
The ECB has hiked its benchmark rate by 200 bps since July; the bank is expected to hike rates again at its next MPC meeting on 15 December.
Investors are likely to keep a close eye on the ECB MPC minutes due out on Thursday.
The minutes will offer some guidance on whether markets should brace for a 75 bps hike in December or whether the bank will hike by a lower 50 bps.

The Eurozone consumer confidence for November is scheduled for release tomorrow.
Consumer confidence is expected to have improved somewhat, albeit still remaining in negative territory, to -26 from -27.6 in October.

Locally, the SARB’s leading indicator for September is scheduled for release tomorrow; the index slipped to 123.4 in August from 126.2 in July.
Eskom: Stage 4 loadshedding continues until 5am tomorrow; various stages of loadshedding will be implemented this week.

Brent crude oil is at $84.51/bbl ($87.62/bbl*).
Gold price is at $1741/oz ($1760/oz*).
SA CDS is at 271bps (259bps*), Brazil 272bps (265bps*), Turkey 604bps (589bps*).
Yields: US 10yr at 3.79% (3.82%*), German bund at 2.00% (2.01%*) and SA 10-year generic at 10.94% (10.94%*), SA’s R186 is at 8.73% (8.77%*).
The JSE ALSI is down by 1.0% today (+0.6%*).

* Denotes Friday's close.

Key events and data:

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