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In the loop 12 January 2022

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R15.50/$, after closing stronger yesterday (R15.56/$*).
  • EM currencies were mixed yesterday; the BRL (+1.7%), COP (+1.5%) and ZAR (+1.0%) were amongst the biggest gainers; the TRY (-0.2%), MXN (-0.1%) and CZK (-0.1%) were amongst the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.
  • The World Bank expects global GDP to expand by 4.1% in 2022, down from its 4.3% estimate in June 2021.
  • The bank noted Covid flare-ups, diminished policy support, and lingering supply-chain disruptions as adversely impacting the global economic recovery.
  • Advanced economies are expected to reach pre-pandemic trends in 2023; developing economies will continue to lag.
  • US GDP is expected at 3.7% in 2022, while China’s GDP is expected at 5.1% in 2022.
  • Sub-Saharan Africa’s growth is forecast to accelerate slightly, to 3.6% in 2022, then rise further to 3.8% in 2023.
  • SA GDP is pencilled in at 2.1% for 2022.
  • China’s CPI moderated to 1.5% y/y in December, from 2.3 % y/y in November.
  • PPI moderated in December, to 10.3% y/y, from 12.9% y/y in November, reflecting Beijing's efforts to boost China’s energy supply and stabilise prices.
  • Fed Chair Jerome Powell noted in his remarks before the Senate that high inflation is a "severe threat" to the US economic recovery.
  • He vowed that the Fed would do what’s necessary to rein in rising inflation.
  • He further noted that the bank would raise rates more over time should it become necessary.
  • Powell, however, did not specify that rates would increase at the March FOMC meeting, as is being widely expected.
  • He expressed optimism that the disruption between supply and demand will abate in the longer term.
  • US December CPI is in the spotlight today, with expectations of the fastest pace of increase in more than 40 years.
  • CPI is expected to have increased to 7% y/y, from 6.8% y/y in November. 
  • Expectations are for CPI to rise even further in January.
  • This could see more policymakers support a March rate lift-off.
  • Cleveland Fed President Loretta Mester noted that she would support hiking in March if current economic conditions hold. 
  • Kansas Fed President Esther George favours reducing the balance sheet early.  
  • SA has the 18th highest caseload, at 3.534 million; 5,668 new cases were reported yesterday.
  • Active cases are at 142,810; KwaZulu-Natal leads the way, with 61,409 active cases, followed by the Western Cape with 25,073.
  • Covid-19 deaths rose by 119 yesterday, to 92,649; 3.298 million people (or 93.3%) have recovered from the virus.
  • 21.611 million tests have been conducted since 5 March 2020; the positivity rate is at 14%.
  • 28.50 million vaccines have been administered in SA to date; 86,613 vaccines were administered yesterday.
  • 15.88 million people, or 39.91% of the adult SA population, have been fully vaccinated.
  • Brent crude oil is down this morning, and up by 7.5% year-to-date.
  • The gold price is up this morning, and down by 0.5% year-to-date.
  • Brent crude oil is currently at $83.66/bbl; ($83.72/bbl*).
  • Gold is at $1820/oz ($1817/oz*).
  • SA CDS 196bps*, Brazil 213bps* and Turkey 574bps*.
  • Yields: US 10yr at 1.73%*, German bund at -0.027%* and SA 10-year generic at 9.94%*, SA’s R186 at 7.88%*.

* Denotes yesterday’s close.

Key events and data: 

  • 12h00: Eurozone industrial production (November)
  • 14h00: US MBA mortgage applications (7 January)
  • 15h30: US CPI (December)
  • 21h00: US Fed Beige Book

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