In the loop 25 November 2021

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R15.88/$, after closing weaker yesterday (R15.92/$*).
EM currencies were mixed yesterday; the TRY (+4.5%), PHP (+0.5%) and KRW (+0.3%) were amongst the biggest gainers; the RUB (-0.9%), THB (-0.7%) and MXN (-0.7%) were amongst the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Hang Seng are up, while the Shanghai Composite is down.

US FOMC meeting minutes: policymakers are open to removing policy support at a faster pace to contain inflation.
Policymakers added that the committee should be ready to adjust the tapering pace and raise the Fed funds rate sooner should inflation continue to surge.
The minutes showed that officials “generally continued to anticipate that the inflation rate would diminish significantly during 2022”.
Several policymakers, however, suggested that inflation could prove more persistent.
Inflation has risen since the 3 November meeting.
Completing the taper at an earlier date would give the Fed the option to raise interest rates to keep inflation in check.
Vice Chair Richard Clarida noted that it would be appropriate to discuss the speed of tapering at the December FOMC meeting.

Despite rising inflation, US consumer spending jumped 1.3% m/m in October, from 0.6% m/m in September.
Personal income climbed 0.5% m/m in October, from a 1.0% m/m decline in September.
This comes even as the government’s assistance to workers during the pandemic subsided further in October.

ECB policymakers expect inflation to recede in 2022.
However, they noted that the bank can't afford to be complacent should surging inflation persist.
They added that the bank should not commit to loose monetary policy for too long amid the uncertain outlook.
Factors that have been driving inflation in Europe are becoming more structural and more entrenched, according to officials.
The ECB’s MPC meeting minutes are due out today.

The SARB’s Financial Stability Review noted that the SA financial cycle has shifted to an upward phase for the first time in 5 years.
Equity and house prices have moved above their trend levels; this helped lift the cycle into an upward phase.
The bank noted that growth in loans to the private sector, real-estate and equity prices turned positive in Q2:21.
The review noted that financial market conditions are stable and that large financial institutions have maintained sizable solvency and liquidity buffers.

Brent crude oil is currently at $82.39/bbl; ($82.25/bbl*).
Gold is at $1792/oz ($1785/oz*).
SA CDS 223bps*, lower than Brazil 250bps* and Turkey 475bps*.
Yields: US 10yr at 1.63%*, German bund at -0.228%* and SA 10-year generic at 10.16%*, SA’s R186 at 8.17%*.

* Denotes yesterday’s close.

Key events and data:

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