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 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:

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