Closing the loop 24 January 2023

Closing the loop

Shireen Darmalingam

Market highlights:

The rand is weaker at R17.29/$ (R17.20/$*) today; it ranged between R17.15/$ and R17.31/$.
The currency is below its 100-day moving average (R17.52/$) and above its 50-day and 200-day moving averages (R17.17/$ and R16.91/$).
EM currencies are mixed today; the IDR (+1.3%), CLP (+0.9%) and HUF (+0.6%) are the biggest gainers; the ZAR (-0.5%), INR (-0.4%) and COP (-0.4%) are the biggest losers.

The Eurozone S&P Global composite PMI increased to 50.2 in January from 49.3 in December.
The increase was the third consecutive rise following the low reached in October.
The improvement comes on the back of easing energy concerns, which have been supported by government assistance.
Supply chain challenges have also eased.
The increase into expansionary territory is likely to support the case for the ECB to continue hiking rates to tame inflation.
The manufacturing PMI increased to 48.8 in January from 47.8 in December.
The UK composite PMI slipped to 47.8 in January from 49 in December; the slippage was driven by a deterioration in the services PMI.

The Royal Bank of Canada (RBC) meets tomorrow to decide on rates and is largely expected to hike its benchmark rate by 25 bps to 4.5% instead of pausing (previously expected).
The change in sentiment comes following a strong jobs report with the unemployment rate slipping close to a record low of 5% in December.
The RBC also sees signs of inflationary pressure becoming less broad based.
Core CPI has also moderated on a m/m basis.

Locally, the SARB’s leading indicator for November increased only marginally to 123.1 from 123 in October.
The largest detractors were a narrowing of the interest rate spread and a decrease in SA’s export commodity price index denominated in USD.
The largest positive contributors were an acceleration on the 6-months smoothed growth rate in the number of new passenger vehicles sold and in increase in the volume of orders in manufacturing.
The coincident indicator, which measures current economic conditions, slipped to 97.5 in October from 98.2 in September.
The lagging indicator increased to 98.4 in October from 96.8 in September.
Eskom: Stage 4 loadshedding continues from 4pm until 5am today and tomorrow evening; Stage 3 loadshedding will be implemented from 5am to 4pm until further notice.

Brent crude oil is at $88.08/bbl ($88.19/bbl*).
Gold price is at $1930/oz ($1923/oz*).
SA CDS is at 259bps (254bps*), Brazil 247bps (244bps*), Turkey 556bps (551bps*).
Yields: US 10yr 3.51% (3.50%*), German bund at 2.21% (2.20%*) and SA 10-year generic at 10.48% (10.51%*), SA’s R186 is at 8.22% (8.25%*).
The JSE ALSI is down by 0.1% today (+1.1%*).

* Denotes yesterday’s close.

Key events and data:

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