Closing the loop 25 November 2021

Closing the loop

Shireen Darmalingam

Market highlights:

The rand is stronger, at R15.88/$ (R15.92/$*) today; it ranged between R15.81/$ and R15.92/$.
The currency is above its 50-day, 100-day and 200-day moving averages (R15.10/$, R14.85/$ and R14.61/$ respectively).
EM currencies were mixed today; the TRY (+1.8%), HUF (+1.1%) and RUB (+0.4%) were amongst the biggest gainers; the CLP (-0.8%), MXN (-0.5%) and MYR (-0.5%) were amongst the biggest losers.

The ECB MPC minutes noted that the bank was keeping sufficient optionality to allow for future monetary-policy actions.
Policymakers noted that uncertainty over inflation outlook warranted the bank to keep an open mind.
The ECB sees inflation below 2% in medium term.
Supply-chain bottlenecks and high energy prices were noted as upside risks to the inflation outlook.
The minutes highlighted that an increase in near-term rates was likely due to inflation risks.

The Swedish Riksbank left policy rates unchanged today, but incorporated a future rise in rates for the first time.
A rate hike is only expected in H2:24.

Locally, the October PPI overshot expectations coming in at 8.1% y/y from an increase of 7.8% y/y in September.
On a m/m basis, PPI was up by 0.7% in October from September’s 0.9% increase.

The WHO is meeting to discuss the new variant of the virus circulating in SA, Botswana and Hong Kong.
There is concern that the number of mutations could enable the virus to evade immunity.
The NICD noted that SA currently has 22 detected cases, predominantly in Gauteng.

SA CDS is at 223bps (223bps), lower than Brazil 249bps (250bps*) and Turkey 476bps (475bps*).
Yields: US 10yr at 1.63% (1.63%*), German bund at -0.238% (-0.228%*) and SA 10-year generic at 10.13% (10.16%*), SA’s R186 is at 8.15% (8.17%*).
The JSE ALSI is down by 0.1% today (-0.6%*).

* Denotes yesterday’s close.

Key events and data:

Read PDF