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Closing the loop 02 December 2021

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is stronger, at R15.82/$ (R15.97/$*) today; it ranged between R15.80/$ and R16.05/$.
  • The currency is above its 50-day, 100-day and 200-day moving averages (R15.22/$, R14.93/$ and R14.64/$ respectively).
  • EM currencies were mixed today; the ZAR (+0.9%), BRL (+0.7%) and RUB (+0.7%) were amongst the biggest gainers; the TRY (-1.5%), THB (-0.5%) and MYR (-0.4%) were amongst the biggest losers.
  • The Omicron variant and uncertainty around transmissibility and possible reduced vaccine efficacy continue to keep markets on tenterhooks.
  • Pfizer is optimistic about virus protection of its vaccine while Moderna has indicated reduced efficacy of its jab.
  • And it’s threatening to change governments and central banks’ plans of tightening policy.
  • Several countries are implementing new restrictions as the virus spreads, which could impact economic activity ahead of the holiday season. 
  • The US non-farm payrolls for November is expected to have increased by 535k from 531k in October.
  • Strong wage growth could have lured more workers back, as many pandemic relief programs have now expired.
  • Higher inflation has also begun to erode consumers’ savings.
  • The unemployment rate is expected to have slipped to 4.5% in November from 4.6% in October.
  • The labour market could be set back further after the holiday season as the Omicron variant spreads.
  • Locally, electricity production fell by 3.4% y/y in October from 0% in September. 
  • Consumption was down by 3.6% y/y in October from a 0.1% y/y decline in September.
  • The industry-wide PMI, out tomorrow, is expected to have increased to 49.0 pts in November from 48.6 pts in October.
  • The oil price is down by 2.0% today, and up by 30.3% in the year-to-date.
  • The gold price is down by 0.9% today, and down by 6.9% in the year-to-date.
  • Brent crude oil is at $67.42/bbl; ($68.87/bbl*).
  • Gold price is at $1769/oz ($1784/oz*).
  • SA CDS is at 231bps (235bps), lower than Brazil 248bps (245bps*) and Turkey 535bps (528bps*).
  • Yields: US 10yr at 1.42% (1.40%*), German bund at -0.377% (-0.343%*) and SA 10-year generic at 10.12% (10.16%*), SA’s R186 is at 8.02% (8.04%*).
  • The JSE ALSI is down by 0.7% today (+1.0%*).

* Denotes yesterday’s close.

 Key events and data:

  • 02h30: Japan Jibun Bank services and composite PMI (November)
  • 03h45: China Caixin services and composite PMI (November)
  • 11h00: Eurozone Markit services and composite PMI (November)
  • 11h30: UK Markit services and composite PMI (November)
  • 12h00: Eurozone retail sales (October)
  • 15h30: US non-farm payrolls, unemployment rate (November)
  • 16h45: US ISM services and composite PMI (November)
  • 17h00: US factory orders, durable orders (October)

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