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.

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:

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