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Closing the loop 14 October 2021

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is stronger at R14.77/$ (R14.80/$*) today; it traded in a range of R14.70/$ to R14.83/$.
  • It is above its 50-day, 100-day and 200-day moving averages (R14.75/$, R14.48/$ and R14.57/$, respectively).
  • EM currencies were mixed today; the RUB (+0.9%), THB (+0.7%) and IDR (+0.7%) were amongst the biggest gainers; the TRY (-1.1%), CLP (-0.5%) and CNY (-0.2%) were amongst the biggest losers.
  • Rapidly rising energy costs are pushing up inflation gauges and undermining economic growth.
  • Spanish inflation increased to 4% y/y from 3.3% y/y in August.
  • Swedish prices rose less than expected, increasing 2.5% y/y from 2.1% y/y in August.
  • US CPI also rose more than expected in September, which underscored the persistence of inflationary pressures in the economy.
  • Fed officials warned yesterday of the growing risks that supply-chain disruptions could keep inflation elevated for longer than expected.
  • The IMF expects inflation in advanced economies to subside to 2% by mid-2022.
  • However, higher inflation is expected in emerging and developing countries.
  • Several Fed policy makers are due to make public remarks on the economy and central banking later today and tomorrow.
  • This follows the release of the September FOMC minutes which showed that there is agreement that the Fed is poised to begin trimming its stimulus programme as early as November. 
  • St Louis Fed president James Bullard, Atlanta Fed president Raphael Bostic, Richmond Fed president Tom Barkin and Philadelphia Fed president Patrick Harker are all in the spotlight.
  • The oil price is up by 0.7% today and up by 61.6% in the year-to-date.
  • The gold price is up by 0.2% today and down by 5.4% in the year-to-date.
  • Brent crude oil is at $83.73/bbl; ($83.18/bbl*).
  • Gold price is at $1796/oz ($1792/oz*).
  • SA CDS is at 213bps (217bps*), higher than Brazil 206bps (210bps*) and lower than Turkey 448bps (441bps*).
  • Yields: US 10yr at 1.53% (1.53%*), German bund at -0.167% (-0.127%*) and SA 10-year generic at 9.86% (9.81%*), SA’s R186 is at 7.84% (7.80%*).
  • The JSE ALSI is up by 1.4% today (0%*).

* Denotes yesterday’s close. 

Key events and data:

  • 06h30: Japan tertiary industry index (August)
  • 11h00: Eurozone trade balance (August)
  • 14h30: US Empire manufacturing index (October), retail sales (September)
  • 16h00: US University of Michigan sentiment, 1 yr and 5-10 yr inflation expectations (October)

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