Closing the loop

Market highlights:

• The rand is weaker, at R15.34/$ (R15.30$*) today; it ranged between R15.26/$ and R15.41/$.
• The currency is below its 50-day moving average (R15.73/$) and above its 100-day and 200-day moving averages (R15.25/$ and R14.78/$ respectively).
• EM currencies were mixed today; the COP (+0.5%), THB (+0.5%) and PHP (+0.3%) were amongst the biggest gainers; the TRY (-2.5%), RUB (-1.1%) and CZK (-0.5%) were amongst the biggest losers.

• Several policymakers have joined the chorus of the need for higher rates in 2022 and an early lift-off.
• Philadelphia Fed President Patrick Harker has called for a near-term rate hike following the tapering of asset purchases, which ends in March.
• Harker expects at least three rate hikes this year.

• US University of Michigan consumer sentiment data for January, due for release tomorrow, is expected to have deteriorated.
• December saw an improvement in sentiment among households with lower incomes due to the increase in social security payments.
• Higher inflation, the Omicron variant and the surge in cases in the US will likely have impacted on sentiment in January.
• Trade balance data out of the UK, Eurozone and China will be in focus tomorrow.

• UK GDP data for November, out tomorrow, is expected to show an improvement in November from October’s stagnation.
• Data suggests that the economy improved in November despite higher inflation and the removed of fiscal support.
• However, the detection of the Omicron variant and the subsequent surge in cases in UK is likely to have impacted GDP in December.
• GDP is expected to have increased by 0.4% m/m in November from 0.1% m/m in October.
• Consumer caution is likely to weigh on spending and GDP into Q1.

• Locally, electricity production fell by 3.7% y/y in November from a 3.4% y/y decline in October. 
• Consumption was down by 2.4% y/y in November from a 3.6% y/y decline in October.

• The oil price is down by 0.2% today, and up by 9.1% in the year-to-date.
• The gold price is down by 0.4% today, and down by 0.4% in the year-to-date.

• Brent crude oil is at $84.89/bbl ($84.67/bbl*).
• Gold price is at $1821/oz ($1826/oz*).

• SA CDS is at 197bps (195bps*), Brazil 212bps (208bps*) and Turkey 541bps (557bps*).
• Yields: US 10yr at 1.72% (1.74%*), German bund at -0.080% (-0.059%*) and SA 10-year generic at 9.84% (9.81%*), SA’s R186 is at 7.78% (7.75%*).
• The JSE ALSI is down by 0.3% today (+2.6%*).

* Denotes yesterday’s close. 

Key events and data tomorrow:

• 01h50: Japan PPI (December)
• 09h00: UK monthly GDP (November), manufacturing and industrial production (November), trade balance (November)
• 12h00: Eurozone trade balance (November)
• 15h30: US retail sales (December)
• 16h15: US manufacturing and industrial production (December)
• 17h00: US business inventories (November), University of Michigan sentiment index, 1 yr and 5-10 yr inflation expectations (January)
• China trade balance (December)

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