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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: 

  • 09h00: SA leading indicator (July)
  • 10h00: Eurozone current account (July)
  • 14h30: US housing starts, building permits (July)

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