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Closing the loop 11 October 2021

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is weaker at R14.97/$ (R14.92/$*) today; it traded in a range of R14.89/$ to R15.01/$.
  • It is above its 50-day, 100-day and 200-day moving averages (R14.72/$, R14.45/$ and R14.58/$, respectively).
  • EM currencies were mixed today; the HUF (+0.5%), PEN (+0.5%) and PLN (+0.4%) were amongst the biggest gainers; the INR (-0.5%), MXN (-0.4%) and PHP (-0.4%) were amongst the biggest losers.
  • Concerns over inflation are dominating markets’ attention this week. 
  • Policymakers are debating whether the current higher inflation trends are transitory. 
  • It’s been suggested that while inflation may be transitory, it doesn’t necessarily mean that it’s likely to end soon. 
  • The BOE's chief economist has expressed his concern that the magnitude and duration of the spike in inflation is proving to be greater than expected.
  • BOE policymakers have also indicated they were closer to raising interest rates to battle inflation.
  • The US September CPI is due for release this week and is expected to have remained elevated, albeit steady, at 5.3% y/y.
  • The UK unemployment rate for August is due tomorrow and is expected to have slipped to 4.5% from 4.6% in July.
  • The improvement is expected as government’s furlough scheme ended in September and could lead to this change in direction for unemployment.
  • The SACCI business confidence index fell to a one-year low in September to 91.0 pts from 91.9 pts in August.
  • This comes on the back of economic activity being hamstrung by lockdown restrictions together with unease which persisted following the riots in July.
  • Despite the slippage, the average for the first nine months of the year was 9.8 pts higher than the comparable period last year. 
  • The oil price is up by 2.0% today and up by 62.1% in the year-to-date.
  • The gold price is up by 0.1% today and down by 7.4% in the year-to-date.
  • Brent crude oil is at $83.99/bbl; ($82.39/bbl*).
  • Gold price is at $1758/oz ($1757/oz*).
  • SA CDS is at 217bps (213bps*), higher than Brazil 204bps (209bps*) and lower than Turkey 443bps (435bps*).
  • Yields: US 10yr at 1.61% (1.61%*), German bund at -0.124% (-0.151%*) and SA 10-year generic at 10.0% (9.94%*), SA’s R186 is at 7.97% (7.90%*).
  • The JSE ALSI is up by 1.4% today (+0.1%*).

* Denotes Friday’s close. 

Key events and data:

  • 01h50: Japan PPI (September)
  • 08h00: UK ILO unemployment rate (August)
  • 11h00: Eurozone ZEW survey expectations (October)
  • 11h30: SA mining production (August)
  • 13h00: SA manufacturing production (August)
  • 16h00: US JOLTS job openings (August)

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