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Daily Dose

Daily Dose

G Morning,

On the wires…

  • Thousands protest in Madrid against NATO summit
  • Biden signs first significant US gun control law in decades
  • Big blow to climate change as Germany pushes for G7 reversal of fossil fuel commitments
  • Stage 4 power cuts to continue until Wednesday due to labour action, says Eskom
  • Postbank says it’s again paying R350 grants after fixing technical outage
  • Springbok fairy tale loading as veteran Fourie could be set for first cap

Quote of the day…

“If you really want to do something, you’ll find a way. If you don’t, you’ll find an excuse.” — Jim Rohn

The indicators…

Currency crackdown…

On Friday, the rand traded in a tight range between 15.76 and 15.93, always on the firmer side. Well behaved for a Friday, although the majors had a “muted” session themselves. Even Eskom couldn’t shake the rand, while international investors focused their attention on price movements in the equity markets and the meeting of G7 leaders. Equity markets had a whopper of a session (risk supportive), while the meeting of the G7 leaders focused on the issue of global inflation and potential recession.

 

As mentioned, the US equity markets were well higher, wiping out losses for the last 2 weeks. This as economic data suggested that inflation might be cooling. This morning Asian markets have followed suit. As a follow- through check, US equity markets look like they will open unchanged. This might be proof that inflation bullishness might be jumping the gun for now. We expect a roller- coaster ride with investor expectations, while every economic release will have an impact on the future of global inflation and the path of monetary policy to follow. Inflation- interest rates- recession will continue to dominate for the foreseeable future.

 

Other indicators: Gold is slightly higher, although G7 plans to ban Russian gold imports. This move has been viewed as largely symbolic (already active), so no real impact on the gold price. Brent is higher again, although the oil producers are concerned about the impact of a recession will have on demand (shame!). US 10-year yields are slightly higher ( not great for risk- see below) but remain below the 3.2% level. The SA R2030 yields has kicked in a day that saw higher yields across the board. Some more good news for $ importers, is that the $ has lost ground against the Euro and the broader basket, which should give the rand some breathing space. Bitcoin has also gained some ground on the back of some risk- on supportive headlines.

 

Very importantly, we have quarter end this week which means pension fund rebalancing and the general expectation is for equity market buying, versus other asset classes. If we see the commodity markets lose ground, we might see the rand come under pressure. In saying that, the rand remains in its recent range, so no immediate need to rush the goalie. Have a good week.

On the radar…

  • All – Russia/Ukraine Crisis
  • All- G7 meeting
  • EU – ECB’s President Lagarde Speaks
  • EU – ECB’s Schnabel Speaks
  • US – Pending Home
  • Sales

US – Durable Goods Orders

Did you know?

At the age of 28, Vincent van Gogh decided to become a painter instead of a pastor.

Have a champion week,

Wayne

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