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Morning NOTE

GOOD MORNING

The ZAR continued to trade weaker on the back of rising Treasury yields following more hawkish Fed  governor comments.

OPENING RATES

• USDZAR 17.9200
• EURZAR 19.1200
• GBPZAR 21.5900

SOUTH AFRICA

SAPO IN TROUBLE?

• Mayor of Cape town, Geordin Hill-Lewis, has flagged concerns about the closure of three Post Offices in the Western Cape
• The mayor says if the branches are closed, people in the area will be forced to get to the next closest post office, which he says is about 20 kilometres away.
• He has now written to the South African Post Office (Sapo) to request an urgent meeting to discuss the closures. EWN

Tshwane Mayor Randall Williams resigns

• Tshwane Mayor Randall Williams has resigned.
• In a statement issued on Monday morning,
  • Williams said he did not resign out of frustration but in the interest of the stability of the coalition government.
  • The DA also praised Williams for his work leading the capital city.
    • And  forward to welcoming Williams “into whatever role awaits him within the DA, where his experience and skill set will be a great asset.” News24

• South Africa’s construction industry is encouraged by the progress being made with the implementation of infrastructure projects and the plans to professionalise the public service.
• President Cyril Ramaphosa said in his State of the Nation Address (Sona) last week;
  • the government’s infrastructure build programme is gaining pace through the work of the Infrastructure Fund and Infrastructure South Africa.
  • The fund was been established to support strategic infrastructure projects. Money web

GLOBAL MARKETS

Stocks:

• US stock futures edged lower on Monday as investors worried about the prospect of higher interest rates ahead of key US inflation data this week.
  • Investors now look ahead to US inflation data on Tuesday that could guide the rates outlook.
  • Dow and S&P 500 futures fell about 0.2%, while Nasdaq 100 futures dropped 0.3%
  • Last week, the Dow shed 0.17%, the S&P 500 fell 1.11% and the Nasdaq dropped 2.41%.
  • Those losses came on the heels of hawkish signals from Fed officials who reaffirmed their commitment to bring down inflation with more rate hikes. BLOOMBERG

Bonds:

• The yield on the US 10-year Treasury, seen as a proxy for global borrowing costs, topped 3.7%, a level not seen in more than a month.
• Traders adjust their portfolios for a higher terminal rate.
• Another governor, Richmond’s Thomas Barkin, the latest officials to acknowledge that the US economy is slowing,
  • but warning that it is fundamental to continue hiking to ensure inflation doesn’t get entrenched.
  •  Investors now see the Fed raising the fed funds rate to 5%-5.25%, with the world’s most influential central bank delivering a 25 bps hike in March and May before pausing. CNBC

On Friday

• The Dow added 169 to 33.869
• The SP500 added 8.96 points to 4,090
• The Nasdaq declined 71 to 11,718

:  image: Trading economics

OVERNIGHT HEADLINES

The US dollar

• The dollar index rallied just short of 104 as investors geared up for key US inflation data this week.
• Last week, a chorus of Fed officials reaffirmed their commitment to bring down inflation with more rate increases.
• Although Powell said, inflation is slowing down, he also noted that rates could peak higher if inflation numbers do not decline.
• Traders seeing this as dashing hopes that this tightening cycle would soon end. FX NEWS

Overnight headlines

• Asian markets
  • Eastern markets mostly fell on Monday amid concerns that the Fed would need to keep pushing rates higher to bring down inflation.
  • Investors also assessed the implications of the surprise nomination of Kazuo Ueda as the next BOJ governor, as well as the impact of tropical cyclone Gabrielle in New Zealand.
    • Major benchmarks in the region all declined, except for mainland China stocks.
• In Japan, the Nikkei 225 dropped 0.88% to close at 27,427, reversing gains from the previous session as investors worried about the prospect of further policy tightening from the Fed.
  • The market also keenly awaiting ahead of key US inflation data this week.
    • Also, the surprise nomination of Kazuo Ueda as the next Bank of Japan governor, eased market worries, and also said the central bank’s current ultra-easy policy “is appropriate” and “needs to be continued.”  REUTERS

Crude oil

• WTI crude futures fell toward $79/bl, lower  easing from two-week highs as concerns that the Fed would tighten policy further to tame inflation.
  • Markets ignoring Russia’s plan to reduce output in retaliation for western sanctions.
  • Last week, a chorus of Fed officials indicated their commitment to bring down inflation with more rate hikes as the US jobs market remains strong.
    • Investors now await key US inflation data on Tuesday for fresh clues about the Fed’s policy plans.
  • Meanwhile, the US oil benchmark jumped more than 2% on Friday, bringing last week’s gains to nearly 9%,
    • after Russia announced its plans to cut output by 500,000 barrels a day in March, or about 5% of total production.
  • Saudi Arabia also raised prices for Asian buyers on a solid demand outlook. GULF ENERGY NEWS

Gold

• Gold weakened past $1,860/oz , sliding toward its lowest levels in 5 weeks and remaining under pressure ahead of US inflation data.
• Markets nervous that it  could reinforce the case for more Federal Reserve interest rate hikes.
• Last week, a chorus of Fed officials reaffirmed their commitment to bring down inflation with more rate increases.
• Also,  Fed Chair Jerome Powell also noted that rates could peak . KITCO METALS