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In the loop 23 November 2022

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R17.25/$, after closing stronger yesterday (R17.26/$*).
  • EM currencies were mixed yesterday; the CLP (+1.6%), HUF (+1.3%) and COP (+0.8%) were the biggest gainers; the BRL (-1.0%), ARS (-0.8%) and PEN (-0.2%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up. 
  • The Eurozone composite PMI data for November is likely to provide insight into the depth of this region’s economic downturn. 
  • The index is expected to have slipped to 47 in November, from 47.3 in October.
  • This comes on the back of a surge in energy prices, broad-based inflation, and tighter financial conditions.
  • The manufacturing PMI is also likely to have deteriorated in November. 
  • The UK composite PMI will probably have fallen again in November, to 47.5 from 48.2 in October, on tighter funding conditions and the cost-of-living crisis.
  • The US composite PMI is expected at 48 in November, from 48.2 in October; both the manufacturing gauge likely slipped in November.
  • The US FOMC minutes of the November meeting are due out tonight.
  • The minutes are likely to show consensus on the need to slow the pace of rate hikes but division on the end-point.
  • Investors will also look to see whether there is consensus to prioritise inflation or the economy.
  • US durable goods orders and new home sales data for October are scheduled for release today.
  • The University of Michigan sentiment for November (final estimate) is expected to have fallen, reflecting uncertainty over inflation, rising interest rates, and the likelihood of a recession in 2023.
  • The RBNZ has hiked its benchmark interest rate by a record 75 bps, to a 14-year high of 4.25%. 
  • This comes as the central bank fights high inflation; the bank expects the New Zealand economy to enter a recession in mid-2023. 
  • The governor noted that the cash rate may rise further to a peak of 5.5% in Q3:23. 
  • Locally, the October CPI is expected at 7.4% y/y, from 7.5% y/y in September.
  • On a m/m basis, CPI is likely to have increased by 0.2% in October, after having increased by 0.1% in September.
  • Eskom has implemented Stage 2 loadshedding until 4pm; Stage 4 loadshedding is expected at 4pm until 5am. 
  • Brent crude oil is down this morning, and up by 13.4% year-to-date.
  • The gold price is down this morning, and down by 5.1% year-to-date.
  • Brent crude oil is currently at $88.25/bbl; ($88.36/bbl*).
  • Gold is at $1736/oz ($1739/oz*).
  • SA CDS 261bps*, Brazil 260bps* and Turkey 569bps*.
  • Yields: US 10yr at 3.75%*, German bund at 1.97%* and SA 10-year generic at 10.88%*, SA’s R186 at 8.65%*.

* Denotes yesterday’s close. 

 Key events and data: 

  • 10h00: SA CPI (October)
  • 11h00: Eurozone S&P manufacturing, services and composite PMI (November)
  • 11h30: UK S&P manufacturing, services and composite PMI (November)
  • 14h00: US MBA mortgage applications (18 November)
  • 15h30: US durable goods orders (October), initial jobless claims (19 November)
  • 16h45: US S&P manufacturing, services and composite PMI (November)
  • 17h00: US University of Michigan sentiment, 1 yr and 5-10 yr inflation expectations (November – final), new home sales (October)
  • 21h00: US FOMC meeting minutes (2 November)

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