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Closing the loop 23 November 2021

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is marginally weaker, at R15.83/$ (R15.82/$*) today; it ranged between R15.76/$ and R15.93/$.
  • The currency is above its 50-day, 100-day and 200-day moving averages (R15.04/$, R14.82/$ and R14.60/$ respectively).
  • EM currencies were largely down today; the TRY (-7.8%), COP (-1.2%) and BRL (-0.8%) were amongst the biggest losers.
  • Eurozone business activity increased in November despite the renewed concerns around rising Covid infections on the bloc and worsening global supply chain concerns.
  • The composite PMI increased to 55.9 pts in November from 54.2 pts in October; the manufacturing and service PMIs both improved in November.
  • The data suggests that the economy is holding up well despite challenges in its path.
  • Economic activity in the UK was mixed in November; the manufacturing index improved while the services and composite indices slipped during the month.
  • Cost pressures continues to increase across the UK which supports the case for a rise in interest rates.
  • The US PMIs, out later today, are also expected to have improved in November.
  • The US Q3:21 GDP (second estimate), due tomorrow, is expected to have moderated to 2.2% y/y (annualised) from a 6.7% y/y (annualised) increase in Q2:21.
  • Growth is expected to have slowed due to the Delta variant and supply chain constraints. 
  • Investors will also focus on the FOMC meeting minutes of 3 November due out tomorrow.
  • Locally, the SARB’s leading indicator slipped to 125.0 pts in September from 127.9 pts in August.
  • The largest negative contributions were declines in the USD-denominated export commodity price index and the number of residential building plans passed.
  • The index was supported by positive contributions in the average hours worked per factory worker and the volume of orders in manufacturing.
  • The coincident index, which measures current economic conditions, rose to 83.8 pts in August from 92.6 pts in July.
  • The index was supported by an improvement in the real retail and new vehicle sales, industrial production and increased capacity utilisation in the manufacturing sector.
  • The lagging index increased in August to 85.0 pts from 84.2 pts in July.
  • The BER’s Q4:21 business confidence index is on the cards tomorrow; we expect an improvement in sentiment following the unrest which weighed on Q3:21 confidence.
  • The oil price is up by 1.6% today, and up by 56.2% in the year-to-date.
  • The gold price is down by 1.0% today, and down by 5.6% in the year-to-date.
  • Brent crude oil is at $80.90/bbl; ($79.70/bbl*).
  • Gold price is at $1791/oz ($1808/oz*).
  • SA CDS is at 223bps (211bps), lower than Brazil 247bps (238bps*) and Turkey 496bps (441bps*).
  • Yields: US 10yr at 1.65% (1.62%*), German bund at -0.236% (-0.301%*) and SA 10-year generic at 10.13% (10.0%*), SA’s R186 is at 8.18% (8.04%*).
  • The JSE ALSI is down by 0.2% today (+0.7%*).

* Denotes yesterday’s close. 

Key events and data:

  • 02h30: Japan Jibun Bank manufacturing, services and composite PMI (November)
  • 12h00: SA BER business confidence (Q4:21)
  • 14h00: US MBA mortgage applications (19 November)
  • 15h30: US initial jobless claims (20 November), GDP (Q3:21)
  • 17h00: US personal income and spending (October)
  • 17h00: US University of Michigan sentiment, 1 yr and 5-10 yr inflation expectations (November), new home sales (October)
  • 21h00: US FOMC meeting minutes

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