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Closing the loop 19 January 2023

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is weaker at R17.21/$ (R17.12/$*) today; it ranged between R17.08/$ and R17.30/$.
  • The currency is below its 100-day moving average (R17.52/$) and above its 50-day and 200-day moving averages (R17.17/$ and R16.86/$).
  • EM currencies are mixed today; the RON (+0.5%), CZK (+0.4%) and HUF (+0.4%) are the biggest gainers; the THB (-0.6%), ZAR (-0.6%) and MXN (-0.5%) are the biggest losers.
  • World Economic Forum (WEF) update: several European leaders see improvements in expectations for the Eurozone economy this year despite high inflation and the Russia-Ukraine war.
  • They have however warned that there is still much work to do. 
  • ECB President Christine Lagarde commented today that inflation remains far too elevated.
  • She noted that the ECB is likely to stay the course until such time that rates have moved into restrictive territory for long enough so that inflation can return to 2% in a timely manner.
  • The BOE noted today that, according to a survey, UK banks are more hesitant about lending to households than they have been since the global financial crisis.
  • The bank’s quarterly credit conditions survey reflected that lenders expect to sharply reduce the amount of money they extend for credit cards, car finance and personal loans. 
  • This is the most pessimistic banks have been on future credit availability since the start of the survey in 2007.
  • This has been driven by rising interest rates and falling real incomes adversely impacting consumer living standards and reducing the ability of many households to repay their debts.
  • The results of the BOE survey underscore the growing risks for the UK economy.
  • US housing starts fell to 1,382k in December from 1,401k in November; building permits fell to 1,330k in December from 1,351k in November.
  • This comes on the back of a cooling in demand as potential home buyers pull out of the market due to affordability. 
  • Existing homes sales are due out tomorrow and are also likely to have slipped in December.
  • Locally, it was a quiet day as far as data releases were concerned.
  • Eskom implemented Stage 5 loadshedding at 4pm until 5am; Stage 4 loadshedding will resume then.
  • The oil price is up by 0.4% today, and down by 0.7% in the year-to-date.   
  • The gold price is up by 0.7% today, and up by 5.1% in the year-to-date.
  • Brent crude oil is at $85.30/bbl ($84.98/bbl*).
  • Gold price is at $1917/oz ($1905/oz*). 
  • SA CDS is at 267bps (247bps*), Brazil 247bps (236bps*), Turkey 567bps (545bps*).
  • Yields: US 10yr 3.40% (3.36%*), German bund at 2.08% (2.02%*) and SA 10-year generic at 10.47% (10.38%*), SA’s R186 is at 8.20% (8.13%*).
  • The JSE ALSI is down by 0.6% today (+0.6%*).

* Denotes yesterday’s close. 

Key events and data:

  • 01h30: Japan CPI (December)
  • 02h01: UK GfK consumer confidence (January)
  • 09h00: UK retail sales (December)
  • 17h00: US existing homes sales (December)

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