Markets Update with TreasuryONE

Durable goods Durable goods sank 4.5% in January because of a pullback in volatile passenger-plane bookings. Yet business investment rose at the fastest pace in five months in another sign of strength for the economy early in the new year. Economists polled by the Wall Street Journal had forecast a 3.6% drop in orders for durable goods. These are products like cars, planes, and computers meant to...

While most of the headlines will be hogged by the fact that South Africa has been greylisted, the Rand reacted more to the higher-than-expected PCE data out of the US (4.7% vs 4.2% exp). The PCE is the Fed's favorite measure of inflation, and with inflation looking like it is sticky, it has sent some fears that the Fed needs to be more aggressive and that more rate hikes than previously thought wi...

Rand trading firmer Headlines that Stage 7 load-shedding would be implemented spooked the market earlier this morning, and we saw the rand sell-off to R18.38. However, the market reacted positively on the release of the budget speech’s embargo, as we saw the rand firm to R18.13 before settling below R18.20. A concern from the budget speech would be that Eskom is receiving a bailout of R254 billion...

Rand still looking vulnerable As we head into the calm before the storm, the Rand looks a little vulnerable around the R18.20 mark. We have seen the US dollar on the front foot today, as it tested 1.0650 against the Euro, which was the primary cause for the Rand to weaken. One also has to remember that the US was out of the market yesterday, and the early move in the US dollar could be the reposit...

Rand slightly disconnected from other EMs The rand softened during most of the day, trading in a 15cent range, while other EM’s grinded out small gains. The rand’s performance over the past few weeks has not been the best, and we could expect the rand to remain under pressure with load-shedding pushed back to stage 6 and the upcoming budget speech on Wednesday. We expect little to change overnight...

Rand is ending the week on the front foot After the week the Rand had, we have seen the Rand ending the week on the front foot. The Rand is under pressure from local factors and a stronger US dollar, and we did see the Rand reach R18.28 during trade today. The US dollar was within eye-sight of the 1.0600 level but has since retreated towards 1.0650, giving Rand a bit of respite. The fact that the...

Dollar climbs on hawkish Fed remarks The PPI data was decidedly unfriendly to the disinflationary narrative. It came out 0.7% month-on-month, up from -0.2% in December and ahead of forecasts of 0.4%, not only quite a bit higher than expected across all aggregates last month, but prior data was revised up as well. Treasury yields are rising fast after the Cleveland Fed's Loretta Mester said she saw...

Strong US numbers continue The list of US economic data that surprise to the topside continues, as Retail Sales for January print higher than expected. The market’s reaction on the back of the number was bullish for the dollar, with the greenback currently trading below 1.20 against the pound and at 1.0660 against the euro. The dollar index is touching the 1.04 mark for the first time since Novemb...

Risk off and Moody’s woes The rand tracked back above the R18.00 handle today, the first time since rumors emerged for the Phala Phala saga back in November. Continued risk-off sentiment, a stronger dollar, and a warning from Moody’s over their concern about the potential impact on GDP from load-shedding have been the catalyst for the rand’s performance today. Looking at other EM currencies, the i...

EM's under pressure The Rand and its EM peers are under renewed pressure, with all EM currencies in the red for the day. The move in the US dollar today caused EM's to slide as the sentiment heading into the weekend turned decidedly negative. The US dollar is currently trading at 1.0693, breaking below the 1.0700 level and quite a move from the 1.0780's where we traded yesterday. The Rand punched...

Softer dollar boosts rand before SONA The dollar has softened during the course of the day, with the rand trading back around the R17.65 handle at the moment. Our local currency looked shaky during the early morning hours after it opened just below the R17.80 mark, but a softer dollar led to the rand grinding lower ahead of tonight’s SONA address. The euro and pound are both 0.8% stronger for the...

Rand is on a slippery slope The Rand rode a little bit of a rollercoaster in the last 24 hours, as the Rand dipped all the way to R17.45 during Fed Chair Powell's speech but soon popped back up to R17.60. Today the Rand started off the day around R17.50 but has since lost some ground and is currently trading at R17.80. Pinpointing the exact cause of the Rand weakness has been a bit difficult as we...

Rand trading in a range There has been a fair amount of risk-premium built into the rand over the past few days, and After three straight sessions of rand selling, we look set to post a green day at the moment. The local currency traded in a relatively narrow 10-cent range for the day and looks intent to end the day close to the R17.60 handle. The dollar marches on The dollar has pushed forward ag...

Risk-off still in evidence Today we have seen a bit of follow-through from Friday's risk-off sentiment as the Rand reacted to a stronger US dollar. The Rand started the day around the R17.45 level but has weakened past the crucial R17.50 level and is currently trading at R17.60 against the US dollar. Similarly, the US dollar has strengthened back to 1.0750 against the Euro, and it is not too long...

Jobs report surprise The US non-farm payroll data blew expectations out of the water, coming out at 517,000 jobs versus 188,000. It seems too good to be true and is, with the gain is primarily due to seasonal factors and revisions to past data. These revisions include updating the population controls – which would have the mechanical effect of boosting the labour force – and updating seasonal fact...

Central Bank week providing volatility Following the outcome of the FOMC last night, the ECB and BoE announced that they would raise rates according to the 50bps expectation. The market’s reaction is the interesting part in the fact that we see both the euro and pound trading down 0.50%. In recent weeks we have seen the dollar fall under pressure against the euro and pound, and the only logical ex...

Rand enjoys positive sentiment before Fed The Rand has been on the front foot for most of the day as the local unit trades at R17.23 against the US dollar. Whether the move is a bit of positioning before the Fed remains to be seen, but the Fed is the main course this evening. We did see the US dollar a little bit weaker after the ADP number disappointed, which in turn only helped the Rands cause....

Market waiting for the Fed Much has been said about the market moving range-bound ahead of the FOMC outcome tomorrow evening, and today has been nothing different. The dollar is trading flat against the euro and pound, with EM's still tracking softer. The rand tested slightly below R17.50 before trading back toward this morning's opening levels. Our local currency continues to trade weaker than it...

Week starts off being risk-off With the amount of economic data and events this week, we have seen the market being decidedly risk-off. We have seen US treasury yields higher as the market is trying to determine what might happen this week. This week we have the Fed with its interest rate decision and the ECB with its interest rate decision and to cap the week of the US non-farm payroll number. Ea...

Markets range-bound ahead of Fed The rand has traded fairly range bound this week, even though the SARB surprised with a 25bps hike yesterday afternoon. We have traded sideways between the R17.05 to R17.30 range for most of the week, with the dollar tracking sideways against most of its peers. The dollar is ending the week slightly up against the euro and pound, with the market patiently waiting f...

SARB surprises with 25bps interest rate hike SARB has raised interest rates by 25bps, taking repo to 7.25% and prime rate to 10.75%. SARB has also drastically revised their growth for the economy down in 2023 to 0.3% from 1.2% previously, as load-shedding is severely hampering growth. A material reduction in load-shedding could raise the growth again. Inflation is to average 5.4% in 2023, so back...

With data out of the US and the MPC of South Africas' meeting tomorrow, we have seen markets trading in a lacklustre manner. The Rand has traded in an 8-cent range for the day with little to no direction before tomorrow. The Rand is currently trading at R 17.20 and looking to stay there for the evening session. The prediction for tomorrow is split right down the middle in the market, with some mar...

The Rand started around the R17.20 level this morning and weakened quite sharply to R17.30 in the morning trading session. Since the initial run-up, it has stayed relatively stable around the R17.30 level, as no noteworthy events happened in the market. Pinpointing the reason why the Rand lost ground so quickly this morning is unclear, but we did see most of the EM markets have the same knee-jerk,...

A slow day in the currency space, which saw most currencies tracking sideways. The dollar traded fairly range-bound against most of its peers, with the euro currently holding firm around the 1.0850 mark. The dollar gained 1% against the JPY as markets digest the minutes from last week’s Bank of Japan meeting. The rand has traded back to the R17.20 levels, with US Treasury Yields creeping higher du...

Rand is looking to close below R17.20 While the Rand looked under pressure in early morning trade with the local unit testing the R17.35 level. The Rand made an about-turn since hitting R17.35 and is currently trading at R17.20. The peculiar thing was that the Rand strengthened in the wake of a stronger US dollar, with the greenback currently trading at 1.0810. The belief is that there is a bit of...