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In the loop 25 January 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R17.18/$, after closing stronger yesterday (R17.19/$*).
  • EM currencies were mixed yesterday; the HUF (+1.8%), CLP (+1.6%) and IDR (+1.3%) were the biggest gainers; the RUB (-0.5%), INR (-0.4%) and PEN (-0.3%) were the biggest losers.
  • The US S&P Global manufacturing, services and composite PMIs in January remained in contraction for a seventh consecutive month.
  • The PMIs improved but remained below the 50pt benchmark.
  • The composite PMI increased to 46.6 in January, from 45 in December, while the services PMI increased to 46.6 in January, from 44.7 in December.
  • The manufacturing index shrank for a third consecutive month and remains near the weakest since May 2020.
  • S&P Global noted companies are still concerned about the ongoing impact of high prices and rising interest rates, as well as worries over supply and labour shortages.
  • The PMI data is in contrast to the Eurozone PMI which exhibited an unexpected return to growth, adding to evidence that this region may avoid a recession this year.
  • Australia’s CPI accelerated to 7.8% y/y in Q4:22, the fastest pace in 32 years, from 7.3% y/y in Q3:22.
  • Services inflation recorded the largest annual rise since 2008.
  • Core inflation, a measure preferred by the Reserve Bank to Australia (RBA), accelerated to 6.9% y/y in Q4:22.
  • Australia seems to be lagging developed-world peers; several developed markets’ inflation has already begun to ease.
  • Money markets are now pricing in an interest rate hike in February.
  • Locally, a survey of 3,200 registered voters conducted by the Social Research Foundation highlighted that South Africans favour the US over the East.
  • More than one-third of South Africans would choose to work and raise their families in the US.
  • A fifth chose the UK, 11% Germany, and 9.4% Cuba.
  • A small fraction chose Russia and China (out of six nations); only 1.4% chose Russia and 0.8% China. 
  • The survey noted that most South Africans would prefer to “live and work in a Western liberal democracy”.
  • It’s a quiet day as far as data releases are concerned.
  • Eskom: loadshedding has been downgraded to Stage 3; Stage 4 loadshedding will commence at 4pm until 5am tomorrow.
  • Brent crude oil is upthis morning, and up by 0.5% year-to-date.
  • The gold price is down this morning, and up by 5.6% year-to-date.
  • Brent crude oil is currently at $86.37/bbl; ($86.13/bbl*).
  • Gold is at $1927/oz ($1933/oz*).
  • SA CDS 260bps*, Brazil 246bps* and Turkey 554bps*.
  • Yields: US 10yr at 3.45%*, German bund at 2.15%* and SA 10-year generic at 10.47%*, SA’s R186 at 8.21%*.

* Denotes yesterday’s close. 

 Key events and data: 

  • 09h00: UK PPI (December)
  • 14h00: US MBA mortgage applications (20 January)
  • 17h00: Royal Bank of Canada interest rate decision – 25 bps hike expected

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