In the loop 03 December 2021

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R15.94/$, after closing marginally stronger yesterday (R15.96/$*).
EM currencies were mixed yesterday; the COP (+0.9%), RUB (+0.8%) and BRL (+0.7%) were amongst the biggest gainers; the TRY (-3.4%), HUF (-0.6%) and THB (-0.4%) were amongst the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are up, while the Hang Seng is down.

The European Health Agency has noted the Omicron variant as spreading so fast that it might account for over half of cases in Europe in just months.
An SA study indicates that the risk of reinfection from this variant is three times higher than any previous variants.
The spread of the Omicron variant will likely see markets remaining volatile today.

Several Fed policymakers are now calling for the wrapping up of asset purchases towards end Q1:22.
Atlanta Fed President Raphael Bostic, San Francisco Fed President Mary Daly and Governor Randal Quarles agreed that it might be appropriate to bring forward rate increases.
Treasury Secretary Janet Yellen noted the Fed’s job as having to avert a wage-price spiral; she concurs with the Fed’s reasoning to scale back asset purchases.

US non-farm payrolls for November are due out today, as are the services PMIs for several countries.
US employers likely added 550k jobs in November, from October's 531k.
The unemployment rate is expected to have slipped to 4.5% in November, from 4.6%in October.
A strong payrolls print today, together with an elevated US CPI reading for November, might cement policymakers’ decision to announce a faster tapering pace at the next FOMC meeting.
Also, an interest rate hike might well be brought forward.
China’s Caixin services PMI slipped in November, albeit remaining above the 50-pt benchmark.
Japan’s official services PMI increased in November, remaining in expansion for a second month.

OPEC+ is planning an oil supply hike, adding 400,000 barrels a day from January.
This decision will be reviewed as the Omicron risk becomes clearer.
Brent crude oil is up this morning, and up by 37% year-to-date.
The gold price is up this morning, and down by 6.6% year-to-date.

Brent crude oil is currently at $70.96/bbl; ($69.67/bbl*).
Gold is at $1773/oz ($1763/oz*).
SA CDS 230bps*, lower than Brazil 241bps* and Turkey 534bps*.
Yields: US 10yr at 1.44%*, German bund at -0.369%* and SA 10-year generic at 10.06%*, SA’s R186 at 7.97%*.

* Denotes yesterday’s close.

Key events and data:

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