Closing the loop

Market highlights:

• The rand is weaker, at R15.66/$ (R15.61/$*) today; it ranged between R15.53/$ and R15.78/$.
• The currency is above its 50-day, 100-day and 200-day moving averages (R14.98/$, R14.79/$ and R14.58/$ respectively).
• EM currencies were largely down today; the HUF (-1.1%), CZK (-0.9%) and PLN (-0.8%) were amongst the biggest losers.

• UK retail sales overshot expectations in October increasing by 0.8% m/m after remaining steady in September.
• Sales, however, contracted on an annual basis by 1.3% in October from a contraction of 0.6% in September.
• The m/m boost reflected improved confidence about the labour market which increased consumers’ willingness to spend.
• Households may also have brought Christmas spending forward to October and November.
• The improvement in sales in October bodes well for Q4:21 GDP growth.
• It also strengthens the case for an interest rate hike at the December meeting,

• Several countries in Europe are retreating as they head into a 4th wave of the pandemic.
• Next week’s survey data will likely shed light on the economic impact of the rising infection rates in Europe.
• The composite PMI for the euro area and the UK will provide insight that the economic recoveries may be waning.
• The German IFO business survey will also provide more clues about how the economy is dealing with the severe supply chain disruptions and rising energy costs.
• The minutes of the ECB’s October MPC meeting will be watched closely.
• US manufacturing and services PMI data for November are due out next week and are expected to have improved somewhat.

• Locally, Moody’s and S&P will provide their latest sovereign credit reviews of SA later today.
• We expect the ratings to remain unchanged: Moody’s Ba2 (negative outlook), S&P BB- (stable outlook)
• Improvements in key fiscal metrics have reduced the immediate downward pressure on SA’s sovereign credit ratings.
• However, longer-term risks persist.

• The oil price is down by 1.6% today, and up by 54.1% in the year-to-date.
• The gold price is down by 0.1% today, and down by 2.3% in the year-to-date.

• Brent crude oil is at $79.99/bbl; ($81.24/bbl*).
• Gold price is at $1858/oz ($1860/oz*).

• SA CDS is at 203bps (201bps), lower than Brazil 240bps (238bps*) and Turkey 448bps (448bps*).
• Yields: US 10yr at 1.53% (1.58%*), German bund at -0.330% (-0.275%*) and SA 10-year generic at 9.91% (9.87%*), SA’s R186 is at 7.98% (7.96%*).
• The JSE ALSI is down by 1.1% today (-0.1%*).

* Denotes yesterday’s close. 

Key events and data:

• On Monday: 17h00: Eurozone consumer confidence (November)
• 17h00: US existing home sales (October)

Read PDF