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In the loop 17 March 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R18.33/$, after closing at R18.44/$* yesterday.
  • EM currencies were mixed yesterday; the BRL (+1.1%), MXN (+0.9%) and HUF (+0.9%) were the biggest gainers; the RUB (-1.7%), KRW (-0.7%) and COP (-0.7%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.
  • Credit Suisse shares rebounded yesterday following the news that the bank would borrow up to CHF50bn from the Swiss National Bank (SNB).
  • Credit Suisse also offered to repurchase up to CHF3bn worth of senior debt securities. 
  • Eleven US banks agreed to deposit $30bn with First Republic to help restore calm to the distressed bank.
  • These banks have promised to keep the money with First Republic for at least 120 days.
  • The hope is that that’s enough to save First Republic; the cash is expected to give the bank enough time to find another solution, such as a sale.
  • Treasury Secretary Janet Yellen commented yesterday that the US banking system remains sound; Yellen noted that regulators would be examining the collapse of SVB.
  • The US University of Michigan sentiment index is likely to have pulled back slightly in March. 
  • The US industrial and manufacturing production data for February are also on the cards today.
  • The Eurozone CPI for February (final estimate) is due out today; CPI is expected at 8.5% y/y in February, from 8.6% y/y in January.
  • Core inflation increased unexpectedly in February, driven primarily by services inflation increasing to 4.8% y/y in February, from 4.4% y/y in January.
  • The final CPI estimate is expected to provide the necessary details needed to better understand the drivers for the increases and their likely persistence.
  • The ECB highlighted in its MPC statement yesterday that inflation is slowing more than previously thought this year, alongside stronger underlying price gains that exclude volatile items such as food and energy. 
  • The ECB forecasts inflation to average 5.3% this year and then slightly above the 2% target in 2025.
  • ECB President Christine Lagarde noted that should the bank’s economic forecasts play out after the current market uncertainty has subsided policymakers would need to continue tightening monetary policy.
  • The Danish central bank has followed in the footsteps of the ECB and raised its benchmark interest rate by 50 bps to 2.6%.
  • This comes as the central bank tries to protect the krone’s peg to the euro. 
  • Russia’s central bank will likely keep rates steady but is expected to signal that the Board is ready to raise rates in April.
  • Locally, it’s a quite day as far as data releases are concerned.
  • Eskom: Stage 3 loadshedding will continue until further notice. 
  • Brent crude oil is up this morning, and down by 12.1% year-to-date.
  • The gold price is up this morning, and up by 5.9% year-to-date.
  • Brent crude oil is currently at $75.50/bbl; ($74.70/bbl*).
  • Gold is at $1932/oz ($1916/oz*).
  • SA CDS 292bps*, Brazil 247bps* and Turkey 549bps*.
  • Yields: US 10yr at 3.57%*, German bund at 2.29%* and SA 10-year generic at 10.92%*, SA’s R186 at 8.42%*.

* Denotes yesterday’s close. 

 Key events and data: 

  • 12h00: Eurozone CPI (February – final)
  • 13h00: OECD publishes Interim Economic Outlook
  • 15h15: US industrial and manufacturing production (February), capacity utilisation (February)
  • 16h00: US leading index (February), University of Michigan sentiment index, 1 yr and 5-10 yr inflation expectations (March)

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