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Good Afternoon
The ZAR consolidated its hard earned gains around the R18.85/$ level, following a benign US CPI report.
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Market Highlights:
The Rand held on to gains to trade in a narrow range around the R18.85/$ level.
- The local unit benefitting form a lower than expected US CPI report.
- Yesterday’s CPI report surprising markets to the downside and effectively lending support to a “dovish FED “.
- US yields dropping to reach 4.00% and placing the Dollar under pressure.
- The Buck however rebounding after Fed governors called for higher rates to remain.
- Risk assets selling off sharply after the those comments and treasury yields also rebounding due to large issuances.
- The elephant in the room remains the large treasury issuances.
- Hence, Yields will remain well supported during this process and this in turn will help the Dollar.
- It effectively acts as a contraction in money supply or quantitative tightening (QT).
- However, given the slowdown in prices pressures in various sectors of the economy i.e. Services, manufacturing & jobs,
- we expect rates to drift lower and this will be Dollar negative and ZAR supportive.
- Trade : FRIDAY RANGE TRADE USDZAR .
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SOUTH AFRICA
ZUMA
- Former President Jacob Zuma will not be returning to prison.
- Correctional Services Minister Ronald Lamola outlined this decision to members of the media in Hatfield, Pretoria on Friday morning.
- In July, the Constitutional Court upheld the ruling that Arthur Fraser’s 2021 decision to grant Zuma medical parole just two months into his 15-month contempt sentence was unlawful.
- Ultimately, though, he’s now been granted a remission of his sentence.
- The Department of Correctional Services said that he was one of thousands of inmates who’d been granted such a remission in a bid to alleviate overcrowding in prisons. Source EWN
TAXI STRIKE ENDS
- Western Cape Premier Alan Winde said that he was relieved that the minibus taxi strike has ended.
- Winde has called on all parties to commit themselves to the minibus taxi task team and resolve all matters there.
- He said that Western Cape citizens and commuters should always come first and should never be left on the side of the roads again.
- The five people who lost their lives.
- Taxis are back on the road again on Friday after a week-long strike marred by violence and intimidation. Source EWN
GLOBAL MARKETS
Stocks
Equities are flat ahead of New York open.
- US stock futures traded modestly higher on Friday after Wall Street eked out slight gains overnight.
- Investors assessed whether the latest US inflation data could spell the end of Federal Reserve interest rate hikes.
- US CPI rose by 3.2% yoy in July, marginally below market forecasts, and the core gauge posted its smallest back-to-back increase in two years.
- Meantime, San Francisco Fed President Mary Daly said there’s “more work to do,” despite a slowdown in inflation.
Bonds
Yields continue to drip lower following US regional bank concerns.
- The yield on the US 10-year eased to the 4% mark, extending its retreat from the nine-month high of 4.19% on August 3rd.
- A cooler-than-expected CPI report backed market expectations that the Fed will refrain from hiking interest rates this year, raising demand for bonds in the secondary market.
- Consumer prices in the US rose by 3.2% annually, below expectations of a 3.3% rise, while the core gauge was also lower than expected at a 4.7% increase year-on-year.
- Additionally, initial unemployment claims rose beyond expectations to a one-month high, defying the previous trend of labour-market tightness.
- Consequently, financial markets price a 75% certainty that the Fed will hold its terminal rate at 5.5%.
- It goes against the latest Summary of Economic Projections that reflected a median terminal rate of 5.75%. Source CNBC
OVERNIGHT HEADLINES
Market Closes:
- DOW +52 to 35,176
- SP500 +112 to 4,468
- NASDAQ +15 to 13,737
 image: Trading economics
Asian markets
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