Closing the loop 20 May 2022

Closing the loop

Shireen Darmalingam

Market highlights:

The rand is unchanged at R15.84/$ (R15.84/$*) today; it ranged between R15.79/$ and R15.89/$.
The currency is above its 50-day, 100-day and 200-day moving averages (R15.26/$, R15.30/$ and R15.24/$).
EM currencies are mixed today; the COP (+1.8%), RUB (1.5%) and BRL (+1.4%) are the biggest gainers; the BGN (-0.3%), RON (-0.3%) and TRY (-0.1%) are the biggest losers.

UK retail sales contracted by 4.9% y/y in April after having increased by 1.3% y/y in March.
On a m/m basis, sales increased by 1.4% by April after having contracted by 1.2% in March.
The m/m increase was driven by spending on alcohol, confectionary and tobacco in supermarkets.
The increase on these items suggests that people are staying in more to save money.
People seem to be spending more for at home-entertainment rather than going out because the cost of living has increased and lower consumer confidence.
Spending on these items fell in the early months of 2022 as Britons returned to pubs and restaurants.

Several PMI reports are due out next week; the survey data is expected to provide clues on the economic impact of the war.
The UK May manufacturing and services PMIs are expected to have slipped.
The EU PMI reports are also likely to have deteriorated in May, albeit remaining above the 50-benchmark line.
The US PMI data are expected to have reported a slippage in May.

Locally, it was a quiet day as far as data releases were concerned.
Stage 2 loadshedding will be implemented from 17h00 until 22h00 due to capacity constraints.
Loadshedding is expected over the weekend evenings as well.
S&P Ratings Agency reviews its SA ratings tonight; no change is expected.

We look to the SARB’s leading indicator for March next week; the index slipped marginally to 127.2 pts in February from 127.3 pts in January.
The April PPI is also due out next week and is expected to have increased to 12.2% y/y from 11.9% y/y in March.
On a m/m basis, PPI is expected to have moderated to 1.2% in April from 2.5% in March.

Brent crude oil is at $111.89/bbl ($112.04/bbl*).
Gold price is at $1836/oz ($1843/oz*).
SA CDS is at 272bps (279bps*), Brazil 245bps (251bps*), Turkey 715bps (729bps*).
Yields: US 10yr at 2.82% (2.83%*), German bund at 0.949% (0.949%*) and SA 10-year generic at 10.24% (10.29%*), SA’s R186 is at 8.20% (8.26%*).
The JSE ALSI is down by 0.6% today (-1.2%*).

* Denotes yesterday close.

Key events and data:

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