Date: 15th January 2010
Date: 16 May 2011 USD-ZAR 6.9705/7.0310 GBP-USD 1.6134/238 GOLD $1 492.30
EUR-ZAR 9.8466/9595 USD-JPY 80.74/1.16 BRENT 113.13
GBP-ZAR 11.3110/4295 AUD-USD 1.0522/617 DJI 12 595.75
EUR-USD 1.4048/150 R157 7.750% 3M JIBAR 5.575%
Time (GMT)
Country
Event
Month
Exp
Prior
05:00
JP
Consumer Confidence index
Apr
36.70
38.60
09:00
EZ
EZ Trade balance
Mar
2.0bn
-1.5bn
09:00
EZ
HICP final y/y
Apr
2.80%
2.8
12:30
US
NY Fed manufacturing
May
20.00
21.70
1300
US
Net long term TIC Flows
Mar
13:00
US
Overall TIC flows
Mar
14:00
US
NAHB Housing market index
May
EZ
Eurogroup meeting
EZ EZ
ETUC holds 12th Annual congress European Economic Congress
26.9bn 97.70 17.00
16.00
Today’s Talking Point Energy Update: Oil finished slightly stronger on Friday, most likely due to better than anticipated economic data released for the Eurozone. However, oil is trading softer this morning as concern around the US’s economic recovery remains a major factor impacting oil prices and concerns around the Greek debt crises worsening also pulled prices lower. In the medium to longer term, the possibility of high oil prices curbing demand is also bearish for oil prices.
Rand Update It has been a dramatic move in the USD-ZAR and one which reflects the reversal of an overcrowded trade as well as the more elevated perceptions of risk attached to the rising probability of a Greek default. Reports from Greece are at this point concerning and it would appear that projections on revenues and expenditures are not at a level comfortable enough to dismiss. We continue to operate in an environment which requires an inordinate level of intervention by the authorities simply to avert another crisis, never mind grow the economy at a level deemed sustainable. What the Greece example highlights is just how difficult it is to restructure state finances to a more sustainable level when there is a negative impact on GDP growth for doing so. The realisation that the global economic outlook may not be as rosy as first thought is the main story here. It is the reason why investors would prefer to lighten up on their risk trades and look to consolidate the gains already achieved across many asset classes. This is exactly what we feared might happen heading towards the end of QE2 where the market is forced to consider life after Fed intervention at a time when the global economy does not offer one a sense of comfort. According to Reuters data (bid chart), the ZAR finished weaker vs. the USD on Friday, closing at R6.9950 from R6.8830 on Thursday. The ZAR weakened against the EUR, ending at R9.8755 from R9.8128 on Thursday, while similarly finished weaker against the GBP at R11.3291 from R11.2234 the previous day.
Bond Update Local bonds extended losses on Friday, with yields across the board shifting higher. There was a marginal underperformance on the middle to longer dated papers relative to the very short dates, and as a result there has been some flattening of the curve. The ZAR continued to weaken against the USD on Friday, which is bond negative, adding to concerns around inflationary implications. The ILB auction on Friday was very well received, with the shorter dated R212 receiving a cover ratio of 9.6, the highest since it was first issued in June 2010. The strong ILB auction on Friday speaks to the increasing inflation expectations being priced into the market and can explain in part the recent weakness in government papers. Furthermore, last week's SARB MPC has not given investors the kind of guidance they may have hoped for with the CB's increased inflation forecasts only adding to the pressure on bonds. By the close on Friday, the R157 yield had moved significantly higher to 7.730%, effectively eroding the entire downside move achieved over the last month, while the R186 yield also moved higher from 8.635% to close at 8.685%.
JSE Update The local bourse bucked the trend on Friday, managing to finish stronger as markets around the globe closed the week in the red. As the ZAR weakened further against the USD, commodity and export orientated stocks found support which pushed the ALSI into positive territory. By the close on Friday, the ALSI was up 0.88%, with the resources and gold indices taking the lead, gaining 1.19% and 1.86% respectively. Friday’s gains allowed ALSI to finish the week flat in a volatile week of trading. In the US, uncertainty surrounding economic recovery, as the current round of QE winds to an end next month, weighed on the market. The DJIA closed the week 0.79% weaker, eroding all gains achieved earlier in the week. In Europe the main stock markets closed lower after a choppy trading week. Despite better than expected European growth data, persistent concern over euro-zone debt woes overwhelmed the markets. Asian markets are lower at the time of writing, taking direction from weakness in both Europe and the US, with the Nikkei 0.62% lower. There will be seven local earnings reports today which will give equity traders direction.
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 advice. The i nformation therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient.
EUR-ZAR 9.8466/9595 USD-JPY 80.74/1.16 BRENT 113.13
GBP-ZAR 11.3110/4295 AUD-USD 1.0522/617 DJI 12 595.75
EUR-USD 1.4048/150 R157 7.750% 3M JIBAR 5.575%
Time (GMT)
Country
Event
Month
Exp
Prior
05:00
JP
Consumer Confidence index
Apr
36.70
38.60
09:00
EZ
EZ Trade balance
Mar
2.0bn
-1.5bn
09:00
EZ
HICP final y/y
Apr
2.80%
2.8
12:30
US
NY Fed manufacturing
May
20.00
21.70
1300
US
Net long term TIC Flows
Mar
13:00
US
Overall TIC flows
Mar
14:00
US
NAHB Housing market index
May
EZ
Eurogroup meeting
EZ EZ
ETUC holds 12th Annual congress European Economic Congress
26.9bn 97.70 17.00
16.00
Today’s Talking Point Energy Update: Oil finished slightly stronger on Friday, most likely due to better than anticipated economic data released for the Eurozone. However, oil is trading softer this morning as concern around the US’s economic recovery remains a major factor impacting oil prices and concerns around the Greek debt crises worsening also pulled prices lower. In the medium to longer term, the possibility of high oil prices curbing demand is also bearish for oil prices.
Rand Update It has been a dramatic move in the USD-ZAR and one which reflects the reversal of an overcrowded trade as well as the more elevated perceptions of risk attached to the rising probability of a Greek default. Reports from Greece are at this point concerning and it would appear that projections on revenues and expenditures are not at a level comfortable enough to dismiss. We continue to operate in an environment which requires an inordinate level of intervention by the authorities simply to avert another crisis, never mind grow the economy at a level deemed sustainable. What the Greece example highlights is just how difficult it is to restructure state finances to a more sustainable level when there is a negative impact on GDP growth for doing so. The realisation that the global economic outlook may not be as rosy as first thought is the main story here. It is the reason why investors would prefer to lighten up on their risk trades and look to consolidate the gains already achieved across many asset classes. This is exactly what we feared might happen heading towards the end of QE2 where the market is forced to consider life after Fed intervention at a time when the global economy does not offer one a sense of comfort. According to Reuters data (bid chart), the ZAR finished weaker vs. the USD on Friday, closing at R6.9950 from R6.8830 on Thursday. The ZAR weakened against the EUR, ending at R9.8755 from R9.8128 on Thursday, while similarly finished weaker against the GBP at R11.3291 from R11.2234 the previous day.
Bond Update Local bonds extended losses on Friday, with yields across the board shifting higher. There was a marginal underperformance on the middle to longer dated papers relative to the very short dates, and as a result there has been some flattening of the curve. The ZAR continued to weaken against the USD on Friday, which is bond negative, adding to concerns around inflationary implications. The ILB auction on Friday was very well received, with the shorter dated R212 receiving a cover ratio of 9.6, the highest since it was first issued in June 2010. The strong ILB auction on Friday speaks to the increasing inflation expectations being priced into the market and can explain in part the recent weakness in government papers. Furthermore, last week's SARB MPC has not given investors the kind of guidance they may have hoped for with the CB's increased inflation forecasts only adding to the pressure on bonds. By the close on Friday, the R157 yield had moved significantly higher to 7.730%, effectively eroding the entire downside move achieved over the last month, while the R186 yield also moved higher from 8.635% to close at 8.685%.
JSE Update The local bourse bucked the trend on Friday, managing to finish stronger as markets around the globe closed the week in the red. As the ZAR weakened further against the USD, commodity and export orientated stocks found support which pushed the ALSI into positive territory. By the close on Friday, the ALSI was up 0.88%, with the resources and gold indices taking the lead, gaining 1.19% and 1.86% respectively. Friday’s gains allowed ALSI to finish the week flat in a volatile week of trading. In the US, uncertainty surrounding economic recovery, as the current round of QE winds to an end next month, weighed on the market. The DJIA closed the week 0.79% weaker, eroding all gains achieved earlier in the week. In Europe the main stock markets closed lower after a choppy trading week. Despite better than expected European growth data, persistent concern over euro-zone debt woes overwhelmed the markets. Asian markets are lower at the time of writing, taking direction from weakness in both Europe and the US, with the Nikkei 0.62% lower. There will be seven local earnings reports today which will give equity traders direction.
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 advice. The i nformation therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient.
