In the loop 20 September 2022

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is unchanged this morning, at R17.68/$, after closing weaker yesterday (R17.68/$*).
EM currencies were mixed yesterday; the BRL (+1.6%), HUF (+1.2%) and COP (+0.7%) were the biggest gainers; the ARS (-0.6%), ZAR (-0.4%) and KRW (-0.4%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

The US NAHB housing index fell for a 9th consecutive month in September, to 46, from 49 in August.
Sales expectations worsened on the back of a rise in mortgage rates.
The measures of both current and future sales of single-family homes fell further in September to their weakest levels since May 2020.
The US housing market is particularly sensitive to tighter policy.
The Fed is expected to raise rates further this week by a further 75 bps as it tries to tame high inflation.
US housing starts for August, due out today, likely slowed further due to cooling demand amid higher mortgage rates.
The average for a 30-year mortgage loan increased to 6.02%, from 5.89% last week, impacting affordability.

Japan’s CPI overshot expectations in August, coming in at 3.0% y/y, from 2.6% y/y in July.
CPI excluding fresh food was also up in August, to 2.8% y/y, from 2.4% y/y in July.
Rising energy and processed food costs accounted for most of the year-on-year increase.
Higher electricity prices also contributed to the acceleration.
Despite the highest inflation in three decades, the BOJ is unlikely to alter monetary policy when it meets on Thursday.

UK markets were closed yesterday for the funeral of Queen Elizabeth II.
Investors are now looking to the BOE MPC meeting this week; the bank is expected to hike rates by 50 bps.
UK Chancellor Kwasi Kwarteng is due to deliver a mini-Budget at the end of the week.
Focus is likely to be on the details of fixing the energy price cap at £2500 per year for average households, and delivering tax cuts.

Locally, the SARB’s leading indicator for July is due out today; the index increased to 125.2 in June, from 124.7 in May.
Eskom will continue with Stage 5 loadshedding today.

Brent crude oil is up marginally this morning, and up by 18.4% year-to-date.
The gold price is up this morning, and down by 8.8% year-to-date.

Brent crude oil is currently at $92.08/bbl; ($92.00/bbl*).
Gold is at $1672/oz ($1670/oz*).
SA CDS 276bps*, Brazil 247bps* and Turkey 747bps*.
Yields: US 10yr at 3.49%*, German bund at 1.80%* and SA 10-year generic at 10.92%*, SA’s R186 at 9.07%*.

* Denotes yesterday’s close.

Key events and data:

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