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Closing the loop 23 January 2023

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is weaker at R17.21/$ (R17.13/$*) today; it ranged between R17.06/$ and R17.22/$.
  • The currency is below its 100-day moving average (R17.52/$) and above its 50-day and 200-day moving averages (R17.17/$ and R16.90/$).
  • EM currencies are mixed today; the COP (+0.7%), RUB (+0.4%) and THB (+0.2%) are the biggest gainers; the HUF (-1.0%), ARS (-0.5%) and ZAR (-0.5%) are the biggest losers.
  • The Eurozone’s budget deficit widened in Q3:22 on the back of increased efforts by government to shield consumers and businesses from record-high energy costs.
  • Governments across the bloc have responded with a host of measures including fuel tax cuts and subsidies.
  • The budget deficit increased to 3.3% of GDP in Q3:22 from a deficit of 2% in Q2:22.
  • Most member states on the bloc recorded budget deficits in Q3:22; Germany’s deficit widened to 3.8% in Q3:22 from a deficit of 1.1% in Q2:22.
  • The Eurozone consumer confidence for January is due out later today; sentiment is expected to have improved albeit remaining in negative territory.
  • US Treasury Secretary Janet Yellen commented today that she is encouraged by progress on inflation and with energy prices and supply-chain challenges easing across the globe.
  • Several measures of inflation have exhibited signs of easing in recent weeks.
  • CPI has moderated to 6.5% from 9% registered in June 2022; producer prices have also moderated faster than expected.
  • This bodes well for the FOMC’s decision on 1 February; the FOMC is largely expected to slow the pace of rate hikes to 25 bps.
  • Several countries’ PMI data (manufacturing, services and composite indices) are scheduled for release tomorrow. 
  • Locally, it was a quiet day as far as data releases were concerned.
  • We look to the SARB MPC decision on Thursday; a 25 bps hike in the repo rate is expected.
  • The SARB’s leading indicator for December is scheduled for release tomorrow; the index slipped to 123 in November from 124.1 in December.
  • Eskom: Stage 4 loadshedding continues from 4pm until 5am today and tomorrow evening; Stage 3 loadshedding will kick in during the day from 5am to 4pm until further notice.
  • The rand weakened on news of Eskom’s announcement of its proposed 24 months of loadshedding timeframe.
  • The oil price is up by 0.9% today, and up by 2.9% in the year-to-date.   
  • The gold price is down by 0.4% today, and up by 5.1% in the year-to-date.
  • Brent crude oil is at $88.40/bbl ($87.63/bbl*).
  • Gold price is at $1917/oz ($1926/oz*). 
  • SA CDS is at 253bps (262bps*), Brazil 245bps (248bps*), Turkey 553bps (562bps*).
  • Yields: US 10yr 3.53% (3.47%*), German bund at 2.20% (2.17%*) and SA 10-year generic at 10.50% (10.49%*), SA’s R186 is at 8.24% (8.25%*).
  • The JSE ALSI is up by 1.0% today (-0.3%*).

* Denotes Friday’s close. 

Key events and data:

  • 02h30: Japan Jibun Bank manufacturing, services and composite PMI (January)
  • 09h00: SA leading indicator (December)
  • 11h00: Eurozone S&P Global manufacturing, services and composite PMI (January)
  • 11h30: UK S&P Global manufacturing, services and composite PMI (January)
  • 16h45: US S&P Global manufacturing, services and composite PMI (January)

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