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Morning NOTE

 1 March 2023


The ZAR strengthened on the back of month end profit taking and also weaker than expected US DATA.


The Rand gained nearly1.6% to reach 18.2200 in early Johannesburg trading.

  • On Monday the local unit in free-fall to touch 18.5200 before reacting to weaker than expected US economic data.
    • Housing prices in America fell for the 8th straight month as well as PMIU data out of Chicago also indicating a slowdown in the world’s largest economy.
  • Up to now markets have reacted negatively towards the FED’s hawkish rhetoric and but “real economy data” via manufacturing and housing indicate all is not rosy.
    • The Fed continues to fret about a tight labour market and is using that as a basis to hike until inflation reaches 2%.
    • This appears to be the case, in spite of the effect on the broader economy.
    • Asset markets have adjusted (negatively), and we have seen a decline in Equity prices as well as currencies (in favour of the safe-have Dollar).
  • February saw a losing month for STOCKS, CURRENCIES and GOLD VS THE DOLLAR.
  • US YIELDS also all higher, with the 10YT reaching 3.94%
  • This first day of trading for March, and we see the ZAR market starting stronger, with weak dollar longs trapped above 18.4000 forced to liquidate.
  • Focus returns to US ISM  data this after likely to move markets this afternoon.

Data this week 







Market Movement Today:

 The ZAR  opening stronger  with a potential to touch 18.1500 in early trading.
That will present short term importers with an opportunity to buy some Dollar.

  • The move explained, on the back of weak dollar longs and stop losses being triggered causing a sharp drop in the dollar
  • Yesterday, weak housing data also supportive of a slowdown in “rising US yields” adding to pressure on the Dollar.
  • The Dollar failing to hold onto gains above 105, and trading below 104.50
  • Early negative risk sentiment in Europe, likely to drive risk assets weaker.
  • Markets waiting for urgent ISM DATA  later this afternoon.
  • Particularly important after US housing data disappointed yesterday.
  • Market participants now look ahead to more US economic reports, such as consumer confidence, the ISM manufacturing survey, and corporate earnings.
  • This after Durable goods orders fell more than expected in January.

Trade :  remains for short term importers to exact cover and exporters to utilise both FX options and FEC’s .

Expected Ranges:

  • USDZAR :  Expect a range 18.1900-18.4600
    • Importers 18.2800-18.1900
    • Exporters 18.3700-18.4600
  • EURZAR :  Expect a range of 19.2800-19.4900
    • Importers 19.3500-19.2800
    • Exporters 19.4200-19.4900
  • GBPZAR  :  Expect a range of 19.2800-22.2100
    • Importers 21.9500-21.8200
    • Exporters 22.0800-22.2100


  • USDZAR 18.2900
  • EURZAR 19.3900
  • GBPZAR 22.0300



  • An investigation has allegedly revealed the cartels being responsible for some of the malpractice and sabotage at Eskom facilities.
    • The Daily Maverick said it had evidence that at least four criminal cartels had been operating within Eskom for many years.
      • The publication said the cartels were responsible for some of the malpractice and sabotage at Eskom facilities,
        • while equipment was often bought without the actual machinery arriving.
    • The Daily Maverick‘s Kevin Bloom has been investigating Eskom.
      • However, Bloom said that the cartel’s operations were untraceable through forensic audits.
      • “They have insiders in certain power stations, often a senior engineer in a distribution or generation division. NEWS24
  • ActionSA lawyer Michael Herbst says President Cyril Ramaphosa’s statement that government is not constitutionally obligated to provide South Africans with electricity is not true.
    • Ramaphosa filed an opposing affidavit in the case being brought by the United Democratic Movement and 17 others.
    • This was in response to Ramaphosa’s statement in which he said none of the three spheres of government had the responsibility to supply power to South Africans. EWN
  • Public Enterprises Minister Pravin Gordhan confirmed that former Eskom CEO Andre de Ruyter spoke to him about corruption at the power utility, but never presented any evidence.
    • In an interview with Newzroom Afrika, Gordhan said: “Yes, he made allusions about certain individuals, but it was precisely that, allusions.
    • And, as far as the law is concerned, or my understanding of the law is concerned,
      • I can’t just arbitrarily point to someone and say that person is involved… either being corrupt or involved in corruption,” he said. News24
  • South Africa’s unemployment rate eased to 32.7% in the fourth quarter of 2022, the lowest since the first quarter of 2021, from 32.9% in the prior period.
    • The number of unemployed persons rose by 28 k to 7.753 million, the employed increased by 169 thousand to 15.934 million and the labour force went up by 197k to 23.688 million. EWN


  • US stock futures edged lower on Wednesday after the major averages closed out a losing month.
    • Investors repositioned for the prospect of a higher peak for US interest rates.
  • For the month of February, the Dow declined 4.19% and turned negative for the year, while the S&P 500 and Nasdaq dropped 2.61% and 1.11%, respectively.
    • Those losses came on the heels of stronger-than-expected US economic data that suggested the Federal Reserve will have to tighten policy further to tame surging inflation.
  • Investors now look ahead to US manufacturing and construction data on Wednesday, as well as corporate earnings from major firms such as Lowe’s, Salesforce and Snowflake.


  • US 10 Year Note Bond Yield was 3.94 percent on Wednesday March 1, according to over-the-counter interbank yield quotes for this government bond maturity.
  • Yields remain elevated on the back of Fed speakers who continue to push for higher rates to bring inflation down to 2%.
  • Recent data activity shows the US economy continues to face headwinds with Housing prices declining for an 8th straight month.
  • In addition Chicago PMI also showed a slowing printing 43.6 in Feb vs 44.3 previous
    • We now turning our attention to ISM manufacturing data as well as Services later in the week.
    • Both likely to be market movers.


  • The Dow fell 232 points to 32,656
  • The SP500 fell 12 points to 3,970
  • The Nasdaq fell 11 points to 11,455

:  image: Trading economics


The US dollar

  • The dollar index extended losses to 104.9, down from a seven-week high hit above 105 as investors digest the latest economic data and try to gauge the next monetary policy steps.
    • Hotter-than-expected economic data raised the prospect of interest rates staying higher for longer as the Federal Reserve fights stubborn inflation.
      • Investors have now priced at least three more 25 basis point rate hikes this year and see interest rates peaking at around 5.5% by June.
    • Market participants now look ahead to more US economic reports, such as consumer confidence, the ISM manufacturing survey, and corporate earnings.
      • Meanwhile, durable goods orders fell more than expected in January.  Fx news

 Asian markets

  • In Japan, the Nikkei 225 rose 0.26% to close at 27,516, extending gains from the previous session as upbeat Chinese economic data bolstered the outlook for the global economy and lifted market sentiment.
    • Still, investors remained cautious due to a lack of domestic catalysts, while taking cues from a negative lead on Wall Street overnight as markets fretted about the prospect of a higher peak for US interest rates.
    • Notable gains were seen from index heavyweights such as Nippon Steel (1.9%).
  • In Australia, the economy expanded 0.5% qoq in Q4 of 2022, less than market forecasts of 0.8%, and after an upwardly revised 0.7% rise in Q3.
    • This was the fifth straight quarter of growth in the economy but the softest pace in the sequence.
      • Amid intense cost pressures and rising interest rates.
    • For the whole year, the economy grew by 2.7%, much slower than 2021’s figure of 5.9%. source: Australian Bureau of Statistics
  • In China, the Shanghai Composite rose 0.4% to around 3,292, extending gains from the previous session as stronger-than-expected economic data supported market optimism over China’s recovery.
    •  Official and private survey data showed that China’s manufacturing sector expanded more than expected in February as Asia’s largest economy dismantled strict Covid curbs.
    • The country’s services sector also posted solid growth.
    •  Technology stocks extended their recent outperformance, China Telecom (5.1%) and China United Network (10%). Reuters

Crude oil

  • Brent crude oil gained to reach  $84/bl on Wednesday.
  • Prices  rising for the second straight session as investors digested robust manufacturing and services activity data in China, boosting the demand outlook in the world’s largest crude importer.
    • Still, the international oil benchmark declined for the fourth straight month in February, losing more than 2% on fears that further monetary tightening from the Federal Reserve could tip the US economy into recession.
    • Rising US crude inventories and global oil supply also weighed on prices, with OPEC likely pumping more oil in February compared to January.
  • Still, on the supply side, Russia recently revealed its plans to cut oil exports from its western ports by up to 25% in March, exceeding its announced output curbs of 500,000 barrels per day. Gulf Energy news


  • Gold strengthened above $1,830/OZ  on Wednesday, rising for the third straight session as the dollar eased from recent highs.
    • Although expectations that the US Federal Reserve will continue raising interest rates to bring down inflation kept a lid on prices.
  • Bullion  lost more than 5% in February as stronger-than-expected US economic data fanned concerns about hawkish central bank policies.
    • In a speech to an economics class at Harvard University, Fed Governor Philip Jefferson defended the central bank’s 2% inflation target,
      • …warning that changing it could destabilize inflation expectations.
    • Money markets have now priced at least three more 25 basis point rate hikes this year and see interest rates peaking at around 5.5% by June. Kitco metals

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