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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.
  • The oil price is down by 3.5% today, and up by 8.6% in the year-to-date.   
  • The gold price is down by 0.5% today, and down by 4.8% in the year-to-date.
  • 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:

  • 09h00: SA leading indicator (September)
  • 11h00: Eurozone current account (September)
  • 12h00: Eurozone OECD publishes Economic Outlook
  • 17h00: Eurozone consumer confidence (November)

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