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Closing the loop 18 October 2021

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is weaker at R14.68/$ (R14.60/$*) today; it traded in a range of R14.60/$ to R14.80/$.
  • It is below its 50-day moving average (R14.75/$) and above its 100-day and 200-day moving averages (R14.50/$ and R14.57/$, respectively).
  • EM currencies were mixed today; the CLP (+0.8%), BGN (+0.1%) and CNY (+0.1%) were amongst the biggest gainers; the BRL (-1.3%), TRY (-0.7%) and TRY (-0.6%) were amongst the biggest losers.
  • Central banks across the globe are fearing higher inflation with many policymakers hinting of higher interest rates soon. 
  • BOE Governor Andrew Bailey suggested that an interest rate increase is imminent.
  • Bailey remarked that the BOE will have to act to stop inflation expectations becoming entrenched. 
  • Expectations are for a rate increase by year end. 
  • The US Fed rate increase is still a while away, although with inflation in the US rising, there is a risk of an earlier rate increase. 
  • Minneapolis Fed President Neel Kashkari remarks on Fed monetary policy later today.
  • In New Zealand, the RBNZ will probably lift its key rate next month as CPI accelerated to the fastest pace in a decade last month. 
  • ECB officials still believe that price hikes are likely to be transitory.
  • The US industrial production and manufacturing production for September undershot expectations.
  • Factory output slowed in September on the back of temporary outages brought on by Hurricane Ida. 
  • Supply-chain constraints also pressured both industrial and manufacturing production.
  • The US housing starts and building permits data for September, due tomorrow, will provide insight into the residential property market.
  • The sector has battled materials and labour shortages, elevated backlogs and high prices.
  • The oil price is up by 0.5% today and up by 64.5% in the year-to-date.
  • The gold price is up by 0.2% today and down by 6.7% in the year-to-date.
  • Brent crude oil is at $85.21/bbl; ($84.86/bbl*).
  • Gold price is at $1770/oz ($1767/oz*).
  • SA CDS is at 215bps (209bps*), higher than Brazil 204bps (202bps*) and lower than Turkey 453bps (450bps*).
  • Yields: US 10yr at 1.61% (1.57%*), German bund at -0.143% (-0.167%*) and SA 10-year generic at 9.92% (9.84%*), SA’s R186 is at 7.99% (7.84%*).
  • The JSE ALSI is down by 0.3% today (+0.3%*).

* Denotes Friday’s close. 

Key events and data:

  • 14h30: US building permits, housing starts (September)

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