Closing the loop 07 December 2022

Closing the loop

Shireen Darmalingam

Market highlights:

The rand is stronger at R17.12/$ (R17.37/$*) today; it ranged between R17.09/$ and R17.41/$.
The currency is below its 50-day and 100-day moving averages (R17.75/$ and R17.40/$) and above its 200-day moving average (R16.51/$).
EM currencies are mixed today; the ZAR (+1.2%), HUF (+0.9%) and PHP (+0.6%) are the biggest gainers; the CLP (-0.5%), ARS (-0.4%) and KRW (-0.4%) are the biggest losers.

China has eased its lockdown curbs and has moved away from its long-standing Covid-zero policy.
The move reflects increased pressure on President Xi Jinping to steer the economy out of the crisis and restore confidence.
The three-year Covid-zero policy has dampened economic activity and consumer and business confidence.
It’s been reported that Chinese officials are debating an economic growth target of 5% for next year.
Officials have noted that setting a relatively high growth target will shift government towards boosting the economy.

According to Halifax, UK house prices fell at its sharpest pace in 14 years during November.
House prices dropped by 2.3% m/m in November after having fallen by 0.4% m/m in October.
On a y/y basis, prices increased by 4.7% in November from an increase of 8.2% in October.
The fall comes on the back of higher interest rates, which has dented affordability of properties.

Brazil’s central bank is expected to keep its benchmark interest rate unchanged at 13.75% today.
The central bank has raised rates by 450 bps thus far this year.

Locally, the SARB’s gross reserves increased more than expected to $59.88bn in November from $58.70bn in October.
Net reserves also increased in November to $53.39bn from $52.19bn in October.
The BER’s consumer confidence for Q4:22, due out tomorrow, likely deteriorated to -25, from -20 in Q3:22.
The Q3:22 current account, also due tomorrow, is expected to have narrowed to a deficit of 0.8% of GDP, from a deficit of 1.3% of GDP in Q2:22.
Stats SA will release the manufacturing production data for October tomorrow; output is expected to have increased by 5.6% y/y after having increased by 2.9% y/y in September.
On a m/m basis, production likely contracted by 0.4%.

Eskom implemented Stage 6 loadshedding at noon today until further notice.
This comes on the back of a high number of breakdowns as well as the requirement to preserve the remaining emergency reserves.

Brent crude oil is at $79.45/bbl ($79.35/bbl*).
Gold price is at $1779/oz ($1771/oz*).
SA CDS is at 279bps (272bps*), Brazil 253bps (247bps*), Turkey 540bps (531bps*).
Yields: US 10yr at 3.53% (3.53%*), German bund at 1.81% (1.80%*) and SA 10-year generic at 11.17% (11.16%*), SA’s R186 is at 8.98% (9.00%*).
The JSE ALSI is down by 1.0% today (-0.2%*).

* Denotes yesterday’s close.

Key events and data:

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