Closing the loop

Market highlights:

• The rand is weaker, at R15.43/$ (R15.38/$*) today; it ranged between R15.36/$ and R15.52/$.
• The currency is below its 50-day moving average (R15.76/$) and above its 100-day and 200-day moving averages (R15.27/$ and R14.79/$ respectively).
• EM currencies were mixed today; the PEN (+0.4%), CLP (+0.4%) and KRW (+0.2%) were amongst the biggest gainers; the TRY (-1.1%), HUF (-0.9%) and RUB (-0.8%) were amongst the biggest losers.

• The UK ILO unemployment rate slipped to 4.1% in the three months to November from 4.2% in the three months to October.
• The data suggests that government’s decision to withdraw its furlough program in September did not have a significant impact on the labour market.
• Payrolls increased by 184k in December from a 162k increase in November.
• The number of employees in the workforce increased to 409k above the pre-pandemic level.
• The strong print suggests that the Omicron variant had little impact on the labour market in December.
• Vacancies reached 1.27 million in December; the record high number signals that demand for workers remains elevated.

• UK CPI is due for release tomorrow and is expected to have increased to 5.4% y/y in December from 5.1% y/y in November.
• Higher food and energy costs are expected to be the main drivers of December’s print.
• Inflation is likely to peak near 6.5% by April this year.
• In the US, markets will keep an eye on housing market data.

• Locally, mining production overshot expectations in November increasing by 5.2% y/y following an upwardly revised 2.2% y/y in October.
• On a m/m basis, production was down by 2.2% in November from a 3.1% increase in October.
• December CPI, due out tomorrow, is likely to have increased to 5.7% y/y, from 5.5% in November.
• November retail sales will provide evidence of the health of the SA consumer; sales are expected to have increased by 2.0% y/y in November, from 1.8% y/y in October.

• The oil price is up by 0.8% today, and up by 12.2% in the year-to-date.
• The gold price is down by 0.3% today, and down by 0.9% in the year-to-date.

• Brent crude oil is at $87.26/bbl ($86.48/bbl*).
• Gold price is at $1813/oz ($1819/oz*).

• SA CDS is at 217bps (214bps*), Brazil 228bps (228bps*) and Turkey 554bps (560bps*).
• Yields: US 10yr at 1.82% (1.78%*), German bund at -0.026% (-0.025%*) and SA 10-year generic at 9.82% (9.81%*), SA’s R186 is at 7.80% (7.76%*).
• The JSE ALSI is down by 0.9% today (+0.6%*).

* Denotes yesterday’s close. 

Key events and data tomorrow:

• 09h00: UK CPI, PPI, RPI (December)
• 10h00: SA CPI (December)
• 11h00: Eurozone current account (November)
• 13h00: SA retail sales (November)
• 14h00: US MBA mortgage applications (14 January)
• 15h30: US building permits, housing starts (December)

Read PDF