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Closing the loop 25 January 2023

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is unchanged at R17.19/$ (R17.19/$*) today; it ranged between R17.14/$ and R17.25/$.
  • The currency is below its 100-day moving average (R17.52/$) and above its 50-day and 200-day moving averages (R17.17/$ and R16.92/$).
  • EM currencies are mixed today; the HUF (+1.8%), CLP (+1.6%) and IDR (+1.3%) are the biggest gainers; the RUB (-0.5%), INR (-0.4%) and PEN (-0.3%) are the biggest losers.
  • The German IFO business confidence index increased in January to 90.2, up from 88.6 in December.
  • The survey noted that the while businesses are less satisfied with their current situation than in December, they are more confident about their future prospects.
  • The business expectations index rose to 86.4 in January from 83.2 in December.
  • Other indicators have also pointed to improvements in the German economy.
  • The US GDP for Q4:22 is in the spotlight tomorrow; economic growth is expected to have moderated to 2.7% q/q following an increase of 3.2% q/q in Q3:22.
  • Personal consumption is expected to have posted a solid 2.9% gain in Q4:2 compared to 2.3% in March Q3:22. 
  • Business investment is also likely to have added to growth.
  • Residential investment is expected to have been a drag on growth for the second consecutive quarter. 
  • The Royal Bank of Canada (RBC) interest rate decision is expected later today; the RBC is largely expected to hike its benchmark rate by 25 bps to 4.5%.
  • This would mark the 8th consecutive increase in rates.
  • The central bank last month laid the groundwork for a potential pause in monetary tightening. 
  • Locally, it was a quiet day as far as data releases were concerned.
  • Eskom: Stage 4 loadshedding continues from 4pm until 5am tomorrow: Stage 3 loadshedding will be implemented from 5am to 4pm until further notice.
  • The SARB’s MPC will announce its decision on interest rates tomorrow; we expect the SARB to hike the repo rate by 25 bps. 
  • The Bloomberg consensus is for the bank to hike rates by 50 bps.
  • We will keep an eye on changes to the SARB’s GDP and CPI forecasts.
  • The oil price is up by 0.2% today, and up by 0.5% in the year-to-date.   
  • The gold price is down by 0.2% today, and up by 5.8% in the year-to-date.
  • Brent crude oil is at $86.36/bbl ($86.13/bbl*).
  • Gold price is at $1929/oz ($1933/oz*). 
  • SA CDS is at 260bps (254bps*), Brazil 243bps (246bps*), Turkey 556bps (554bps*).
  • Yields: US 10yr 3.44% (3.45%*), German bund at 2.11% (2.15%*) and SA 10-year generic at 10.39% (10.47%*), SA’s R186 is at 8.17% (8.21%*).
  • The JSE ALSI is down by 0.5% today (-0.1%*).

* Denotes yesterday’s close. 

Key events and data:

  • 08h00: Japan machine tool orders (December – final)
  • 11h30: SA PPI (December)
  • 15h00: SA SARB MPC decision
  • 15h30: US GDP (Q4:22), advanced goods trade balance (December), durable goods orders (December)
  • 17h00: US new home sales (December)

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