In the loop 20 March 2023

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.40/$, after closing at R18.47/$* on Friday.
EM currencies were mixed on Friday; the COP (+1.0%), CZK (+0.8%) and KRW (+0.8%) were the biggest gainers; the BRL (-0.9%), CLP (-0.6%) and MXN (-0.2%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Hang Seng are down, while the Shanghai Composite is up.

UBS has agreed to buy Credit Suisse for over $3.2bn in a government-brokered deal.
The deal is aimed at containing a crisis of confidence that is threatening to spread across global financial markets.
The Swiss National Bank (SNB) has also agreed to a $100bn liquidity line to UBS as part of the deal.

The spotlight is on the US FOMC meeting this week.
Rate expectations have swung sharply over the past week, from a 50 bps hike preceding the SVB collapse, to a pause as financial market turmoil intensified around Credit Suisse.
The Fed is still likely to hike the Fed funds rate by 25 bps; this however is a close call.
Investors will keep an eye on the new dot plot which is likely to reflect a higher peak rate.
US existing home sales data for February is due out this week; the US housing market remains depressed due to affordability and weaker expectations for the labour market.
Durable goods orders for February are due out on Friday.

The UK CPI for February, due out on Wednesday, likely moderated to 9.9% y/y, from 10.1% y/y in January.
The BOE will closely watch this inflation outcome ahead of its MPC meeting on Thursday; this following the downside surprise to services inflation in January.
The BOE will carefully consider the financial market turmoil brought about by the collapse of SVB and Credit Suisse’s battle for survival.
The central bank is likely to hike its benchmark interest rate by 25 bps, though this would depend on tensions in the banking sector being contained.
The Eurozone and UK flash PMI as well as Germany’s ZEW survey for March, due this week, will provide evidence on how growth has been developing this year.
The SNB is likely to hike rates on Thursday by 50 bps, to 1.5%.
The Turkish Central Bank is expected to hold rates steady at 8.5% on Thursday.
Brazil’s central bank this week may keep rates on hold at 13.75%.

Japan’s CPI for February, due out on Friday, likely moderated to 3.3% y/y, from 4.3% y/y in January.
Core CPI is expected at 3.1% y/y, from 4.2% y/y in January.

Locally, the February CPI, due out on Wednesday, is expected at 6.8% y/y, from 6.9% y/y.
On m/m basis, CPI is likely to have increased by 0.6%, after having declined by 0.1% in January.
Core CPI is expected to have increased to 5.0% y/y, from 4.9% y/y in January.
The SARB’s leading indicator for January is due out on Wednesday.
The BER’s consumer confidence for Q1:23 is also due out this week.
Eskom: Stage 1 loadshedding is currently in place until 4pm, when Stage 2 load shedding will kick in.
President Cyril Ramaphosa has deployed 3,474 soldiers from March 17 to April 17 to maintain peace.
This as the Economic Freedom Fighters (EFF) is attempting a national shutdown today to force President Ramaphosa to resign.

Brent crude oil is currently at $72.27/bbl; ($72.97/bbl*).
Gold is at $1976/oz ($1989/oz*).
SA CDS 291bps*, Brazil 248bps* and Turkey 551bps*.
Yields: US 10yr at 3.42%*, German bund at 2.10%* and SA 10-year generic at 10.83%*, SA’s R186 at 8.40%*.

* Denotes Friday’s close.

Key events and data:

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