Closing the loop 13 October 2021

Closing the loop

Shireen Darmalingam

Market highlights:

The rand is stronger at R14.83/$ (R14.95/$*) today; it traded in a range of R14.81/$ to R14.98/$.
It is above its 50-day, 100-day and 200-day moving averages (R14.74/$, R14.47/$ and R14.58/$, respectively).
EM currencies were mixed today; the PEN (+1.3%), ZAR (+0.9%) and CZK (+0.5%) were amongst the biggest gainers; the TRY (-0.5%), COP (-0.1%) and BRL (-0.1%) were amongst the biggest losers.

UK GDP fell short of expectations in the 3 months to August coming in at 2.9% from an upwardly revised 4.2% in the 3 months to July.
The disappointing growth comes as shoppers reined in spending in August.
The economic recovery is also being impacted by supply shortages and accelerating inflation.
The data casts doubt on whether the economy will return to pre-pandemic GDP levels this year.
It may also give the BOE room to delay an increase in rates this year.

US CPI overshot expectations in September increasing by 5.4% y/y from 5.3% y/y in August.
The increase was driven by higher food and house prices; prices of used cars and trucks, apparel and airfares moderated.
Shipping challenges, materials shortages, high commodities prices and rising wages have increased producers’ costs who have passed on costs to consumers.
This has led to persistently higher inflation above previous estimates.
The data underscores the persistence of inflationary pressures in the economy.
The market’s attention will now be focused on the US FOMC meeting minutes later this evening.

Locally, retail sales undershot expectations and contracted by 1.3% y/y in August following a downwardly revised decline to 1.2% y/y in July.
Negative y/y growth rates were recorded for retailers in household furniture, appliances and equipment, hardware, paint and glass, all “other” retailers and general dealers .
The main negative contributor to the decrease emanated from general dealers.
On a m/m basis, sales were also short of expectations coming in at 4.9% y/y from a contraction of 11.1% in July.

Brent crude oil is at $82.85/bbl; ($83.42/bbl*).
Gold price is at $1791/oz ($1760/oz*).
SA CDS is at 218bps (220bps*), higher than Brazil 209bps (209bps*) and lower than Turkey 441bps (443bps*).
Yields: US 10yr at 1.56% (1.57%*), German bund at -0.127% (-0.0.86%*) and SA 10-year generic at 9.84% (9.96%*), SA’s R186 is at 7.81% (7.90%*).
The JSE ALSI is down by 0.4% today (-0.2%*).

* Denotes yesterday’s close.

Key events and data:

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