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 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:

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