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Morning NOTE

GOOD MORNING

The ZAR weakened ahead of the D-day for the impeachment vote against President Cyril Ramaphosa.

OPENING RATES

• USDZAR 17.5800
• EURZAR 18.5600
• GBPZAR 21.6000

SOUTH AFRICA

• The parliamentary year is set to end on arguably its most important business of the year on Tuesday whether or not President Cyril Ramaphosa should face impeachment.
  • After a delay of a week, all 400 members of the National Assembly are set to congregate in Cape Town for the all-important vote.
  • Never before has Parliament been faced with such decision.
  • In addition, the Speaker of the House has once again rejected the ATM’s (African transformation movement) request to have a secret ballot.  NEWS24 
     
• The African National Congress (ANC) in Soweto said it believes that Zweli Mkhize was the only candidate that could unite the party.
  • ANC Zone 5 chairperson Siyabonga Masiza said the party was in a fractured state as it’s in the grip of factionalism.
  • Mkhize received 64 branch nominations in Gauteng, compared to 193 for Cyril Ramaphosa. EWN 

ESKOM

• As Eskom loadshedding continues,  Presidential hopefull Zweli Mkhize has called on the ANC to resist attempts to privatise the SOE.
  • This after DA leader Steenhuisen, said the ANC was to blame for the problems at Eskom & not current CEO De Ruyter.
  • Also, ESKOM said, citizens  will have to brace for another day of stage 5 power cuts after Eskom ramped up load shedding at the weekend.
     
• The power utility is blaming an unusually high demand and the breakdown of generating units at its Hendrina, Kendal and Kriel power stations.
  • Koeberg is also offline for routine maintenance. NEWS 24
     
• Also, Ramaphosa has stressed that his new energy plan of maintaining and bringing on new power to South Africa’s old, struggling grid doesn’t happen overnight.
  • “It’s a process and I want South Africans to understand that we’ve got our hands on deck,” President Ramaphosa said.
  • Ramaphosa was speaking on the sidelines of an African National Congress (ANC) event in Cape Town over the weekend,
    • adding that those sabotaging Eskom were landing in handcuffs for the first time.  EWN

GLOBAL MARKETS

Stocks:

• US stock futures held steady on Tuesday as investors prepared for a key US CPI report and the start of the Fed’s December policy meeting.
• Futures contracts tied to the three major indexes traded flat to slightly positive.
• On Monday, the Dow jumped 1.58%, the S&P 500 climbed 1.43% and the Nasdaq Composite added 1.26%, with all S&P sectors finishing in positive territory.

Bonds:

• The yield on the US 10-year increased 3.6%, ahead of  the key US CPI release on Tuesday and the Fed’s  final policy decision tomorrow.
• Consumer prices are expected to have slowed for the fifth straight month in November,
• It will be consistent with fresh data that showed consumer inflation expectations dropped to the lowest in 14 months.
• Evidence of slowing inflation drove money markets to price a 50bps rate hike by the Fed this week

YESTERDAY

• The Dow added 528 to 34,005
• The SP500 added 56 to 3,990
• The Nasdaq gained 139 to 11,0143

•   Image: Trading Economics

OVERNIGHT HEADLINES
 

• Asian markets higher ahead of today’s US CPI and tomorrows Fed meeting.
  • In Japan, the Nikkei 225 jumped 0.4% to close at 27,955, hitting their highest levels in over a week and tracking gains on Wall Street overnight, with nearly all sectors participating in the rally.
    • but, investors remain cautious ahead of a key US CPI  report that could influence the rates outlook, as well as the Federal Reserve’s policy decision on Wednesday.
       
• The US dollar traded around 105 on Tuesday, holding in a tight trading range as investors cautiously awaited a key US inflation report.
  • Traders of the opinion it could influence the near-term outlook for interest rates, as well as the Federal Reserve’s policy decision on Wednesday.
  • Money markets are currently pricing an almost 75% chance that the US central bank will hike rates by 50 basis points after delivering four successive 75 basis point rate increases.
  • Still, investors see a loftier chance that the peak for the Fed funds will be higher than expected if inflation becomes entrenched.  FX news
     

• Brent crude climbed toward $79 per barrel, after gaining more than 2% in the previous session, underpinned by an improving demand outlook from top crude importer China.
  • This after  its ambassador to the US said the country will relax Covid rules further and will welcome more international travellers in the “near future.”
  • On the supply side, the market remains clueless on how long Canada’s TC Energy Corp would take to clean up the largest oil spill in US land in about a decade and restart the Keystone pipeline.
• In the USA WTI crude futures also climbed toward $74/bl on Tuesday after gaining more than 3% in the previous session,
  • underpinned by an improving demand outlook from top crude importer China.  Gulf Energy news
     
• Gold held near $1,780 an ounce in subdued trade on Tuesday after losing nearly 1% in the previous session,
  • as investors braced for key US inflation data that could influence the near-term outlook for interest rates, as well as the Federal Reserve’s policy decision on Wednesday.
    • Major central banks including the US FED, BOE, ECB and SNB all hiking rates this week likely to affect the future direction of bullion prices.
    • Gold remains  highly sensitive to the rates, as higher interest rates raise the opportunity cost of holding non-yielding bullion and dent its appeal, and vice versa. Kitco metals report