Date: 15th January 2010
Date: 24 February 2011 USD-ZAR 7.0587/1543 GBP-USD 1.6205/66 GOLD $1 408.75
Time (GMT) 09:30
Country
EUR-ZAR 9.7348/8443 USD-JPY 81.85/2.36 BRENT 112.50
GBP-ZAR 11.4797/6022 AUD-USD 1.0010/65 DJI 12 105.78
EUR-USD 1.3731/88 R157 7.810% 3M JIBAR 5.575%
Event
Month
SA
PPI y/y
Jan
US
Bullard Speaks on Monitory Policy Outlook 2011
Exp
Prior
5.40%
5.80%
07:00
DE
GDP
Q4
11:00
GB
CBI distributive trades
Feb
25
0.40% 37
13:30
US
Durable goods
Jan
2.40%
-2.30%
13:30
US
New orders XT
Jan
0.40%
0.80%
13:30
US
Jobless claims
w/e
15:00
US
New homes
Jan
0.30 mn
0.33 mn
410k
Today’s Talking Point PPI (Dec): Producer prices are expected to decline further on a y/y basis to 5.2% in Jan after dipping to 5.8% in Dec. This has been a common trend over recent months with PPI moderating all the way from 9.4% in June last year to the current mkt expectation of 5.4% y/y. Aiding this moderation in Jan will be the low base factors at play, despite the 0.8% m/m jump and weaker ZAR seen during the course of Jan. The risk, however, is that inflation pressures begin to filter through more heavily in Jan due to resilient commodity prices and a quick reversal in ZAR gains.
Rand Update In the wake of the budget it is worth noting the general market response. Bonds did not enjoy the budget. The near 0.5% upward revision to the annual budget deficit numbers as a percent of GDP over the next 3 years came as a surprise as it was a sharp deviation away from the MTBPS. It implies more government borrowing, higher debt metrics, a rise in the interest burden which all ultimately translates into more debt issuance. The budget is also premised off the belief that the global economy would continue to expand and will boost domestic growth along with it. However, with developments as they are at the moment with North African and Middle Eastern countries boosting oil prices to painful levels the fragility of the global economy may become evident sooner than anticipated. Another significant downturn and the officials will learn quickly why trying to boost growth through debt accumulation is dangerous. In the current environment where investors are rewarding those countries that are managing their economy in the most conservative manner, the apparent shift in direction towards higher deficits has not been particularly well received. That the ZAR recovered is more a reflection of relief following comments from Gill Marcus that there would be no changes to capital controls and that specific levels on the ZAR were not being targeted. According to Reuters data (bid chart), the ZAR finished stronger vs. the USD on Thursday, closing at R7.1110 from R7.1545 on Wednesday. The ZAR strengthened against the EUR, ending at R9.7074 from R9.7380 on Wednesday, while similarly finished stronger vs. the GBP at R11.4484 from R11.5053 the previous day.
Bond Update The current theme of risk aversion around global markets has seen local bonds remain under pressure. Added to this was the announcement that the budget deficit for 2011/12 is set to increase to 5.3%, which disappointed market expectations. Moreover, the deviation from the prudent fiscal policy experienced over the previous years raises concerns should economic growth not recover as anticipated. Given that National Treasury traditionally look to issue more on the longer end of the curve relative to the shorter end, the forecasted extra issuance has seen the longer end of the curve come under added pressure relative to the shorter end. As a result the R186/R157 spread has widened to 108.5 bps. No surprise to find foreign investors massive net sellers of local bonds to the value of R2.9bn yesterday. At the close on Wednesday the R157 was weaker at 7.795% compared to 7.775%, while the R186 yield rose 11bps from 8.77% at the close of Tuesday to 8.88%
JSE Update JSE information will no longer be included in the daily report, however should you want to see this information in the future, we would welcome the feedback
This report is provided on a complimentary basis by IQuad Group Limited and is prepared by Econometrix Treasury Management (Pty) Ltd. www.e-treasury.co.za DISCLAIMER: IQuad Limited (IQuad) obtains information for its analyses from sources, which it considers to be reliable, but IQuad does not guarantee the accuracy or completeness of its analyses or any information contained therein. IQuad makes no warranties, expressed or implied as to the results obtained by any person or entity from use of its information and analyses, and makes no warranties or merchantability or fitness for a particular purpose. In no event shall IQuad be liable for indirect or incidental, special or consequential damages, regardless or whether such damages were forseen or unforeseen. IQuad shall be indemnified and held harmless from any actions, claims, proceedings, or liabilities with respect to its information and analyses. Clients should be fully aware of the risks involved in trading stock market related products. All illustrations, forecasts or hypothetical data is for illustrative purposes only and is not guaranteed. The information contained in this communication does not constitute an offer, advertisement or solicitation for investment, financial or banking services. It is for informative purposes and not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advi ce. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient.
Time (GMT) 09:30
Country
EUR-ZAR 9.7348/8443 USD-JPY 81.85/2.36 BRENT 112.50
GBP-ZAR 11.4797/6022 AUD-USD 1.0010/65 DJI 12 105.78
EUR-USD 1.3731/88 R157 7.810% 3M JIBAR 5.575%
Event
Month
SA
PPI y/y
Jan
US
Bullard Speaks on Monitory Policy Outlook 2011
Exp
Prior
5.40%
5.80%
07:00
DE
GDP
Q4
11:00
GB
CBI distributive trades
Feb
25
0.40% 37
13:30
US
Durable goods
Jan
2.40%
-2.30%
13:30
US
New orders XT
Jan
0.40%
0.80%
13:30
US
Jobless claims
w/e
15:00
US
New homes
Jan
0.30 mn
0.33 mn
410k
Today’s Talking Point PPI (Dec): Producer prices are expected to decline further on a y/y basis to 5.2% in Jan after dipping to 5.8% in Dec. This has been a common trend over recent months with PPI moderating all the way from 9.4% in June last year to the current mkt expectation of 5.4% y/y. Aiding this moderation in Jan will be the low base factors at play, despite the 0.8% m/m jump and weaker ZAR seen during the course of Jan. The risk, however, is that inflation pressures begin to filter through more heavily in Jan due to resilient commodity prices and a quick reversal in ZAR gains.
Rand Update In the wake of the budget it is worth noting the general market response. Bonds did not enjoy the budget. The near 0.5% upward revision to the annual budget deficit numbers as a percent of GDP over the next 3 years came as a surprise as it was a sharp deviation away from the MTBPS. It implies more government borrowing, higher debt metrics, a rise in the interest burden which all ultimately translates into more debt issuance. The budget is also premised off the belief that the global economy would continue to expand and will boost domestic growth along with it. However, with developments as they are at the moment with North African and Middle Eastern countries boosting oil prices to painful levels the fragility of the global economy may become evident sooner than anticipated. Another significant downturn and the officials will learn quickly why trying to boost growth through debt accumulation is dangerous. In the current environment where investors are rewarding those countries that are managing their economy in the most conservative manner, the apparent shift in direction towards higher deficits has not been particularly well received. That the ZAR recovered is more a reflection of relief following comments from Gill Marcus that there would be no changes to capital controls and that specific levels on the ZAR were not being targeted. According to Reuters data (bid chart), the ZAR finished stronger vs. the USD on Thursday, closing at R7.1110 from R7.1545 on Wednesday. The ZAR strengthened against the EUR, ending at R9.7074 from R9.7380 on Wednesday, while similarly finished stronger vs. the GBP at R11.4484 from R11.5053 the previous day.
Bond Update The current theme of risk aversion around global markets has seen local bonds remain under pressure. Added to this was the announcement that the budget deficit for 2011/12 is set to increase to 5.3%, which disappointed market expectations. Moreover, the deviation from the prudent fiscal policy experienced over the previous years raises concerns should economic growth not recover as anticipated. Given that National Treasury traditionally look to issue more on the longer end of the curve relative to the shorter end, the forecasted extra issuance has seen the longer end of the curve come under added pressure relative to the shorter end. As a result the R186/R157 spread has widened to 108.5 bps. No surprise to find foreign investors massive net sellers of local bonds to the value of R2.9bn yesterday. At the close on Wednesday the R157 was weaker at 7.795% compared to 7.775%, while the R186 yield rose 11bps from 8.77% at the close of Tuesday to 8.88%
JSE Update JSE information will no longer be included in the daily report, however should you want to see this information in the future, we would welcome the feedback
This report is provided on a complimentary basis by IQuad Group Limited and is prepared by Econometrix Treasury Management (Pty) Ltd. www.e-treasury.co.za DISCLAIMER: IQuad Limited (IQuad) obtains information for its analyses from sources, which it considers to be reliable, but IQuad does not guarantee the accuracy or completeness of its analyses or any information contained therein. IQuad makes no warranties, expressed or implied as to the results obtained by any person or entity from use of its information and analyses, and makes no warranties or merchantability or fitness for a particular purpose. In no event shall IQuad be liable for indirect or incidental, special or consequential damages, regardless or whether such damages were forseen or unforeseen. IQuad shall be indemnified and held harmless from any actions, claims, proceedings, or liabilities with respect to its information and analyses. Clients should be fully aware of the risks involved in trading stock market related products. All illustrations, forecasts or hypothetical data is for illustrative purposes only and is not guaranteed. The information contained in this communication does not constitute an offer, advertisement or solicitation for investment, financial or banking services. It is for informative purposes and not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advi ce. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient.
