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Closing the loop 20 June 2022

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is weaker at R16.04/$ (R16.01/$*) today; it ranged between R15.94/$ and R16.09/$.
  • The currency is above its 50-day, 100-day and 200-day moving averages (R15.66/$, R15.34/$ and R15.35/$).
  • EM currencies are mixed today; the RUB (+3.4%), PLN (+0.9%) and HUF (+0.8%) are the biggest gainers; the CLP (-0.7%), PHP (-0.6%) and BRL (-0.4%) are the biggest losers.  
  • It was a quiet day on the global economic data front today.
  • US existing home sales data for May are due for release tomorrow; sales are expected to have fallen by 3.7% m/m in May after declining by 2.4% m/m in April.
  • This comes as the housing market continues to normalise from post-Covid levels.
  • Rising mortgage rates have also dampened housing affordability; contract signings have been down for 6 consecutive months.
  • Declining affordability is also threatening to reduce the supply of available housing as existing owners hesitate to sell.
  • The UK’s BOE policymaker Catherine Mann noted today that the bank needs to raise rates more aggressively to stave off sterling depreciation.
  • Mann also noted that domestic inflation is likely to come in higher than initially anticipated.
  • Mann voted for a 50 bps rise in rates at last week’s MPC meeting.
  • She said that a more robust policy move reduces the risk that domestic inflation already embedded is further boosted by inflation imported via sterling depreciation.
  • Locally, it was a quiet day as far as data releases were concerned.
  • We look to the SARB’s leading indicator for April tomorrow; the index increased to 128 pts in March from 127.2 pts in February.
  • Eskom announced that Stage 2 loadshedding will be implemented from 17h00 to 22h00 and will continue through to Thursday.
  • This is due to the continued shortage of generation capacity.
  • The oil price is down by 0.7% today, and up by 44.5% in the year-to-date.
  • The gold price is down by 0.1% today, and up by 0.5% in the year-to-date.
  • Brent crude oil is at $112.39/bbl ($113.12/bbl*).
  • Gold price is at $1837/oz ($1839/oz*). 
  • SA CDS is at 287bps (288bps*), Brazil 284bps (283bps*), Turkey 818bps (826bps*).
  • Yields: US 10yr at 3.22% (3.22%*), German bund at 1.71% (1.66%*) and SA 10-year generic at 10.71% (10.69%*), SA’s R186 is at 8.67% (8.67%*).
  • The JSE ALSI is up by 1.6% today (-3.1%*).

* Denotes Friday’s close. 

Key events and data:

  • 09h00: SA leading indicator (April)
  • 10h00: Eurozone current account (April)
  • 16h00: US existing home sales (May)

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