View this email in your browser

Morning NOTE

19 April 2023


The ZAR weakened sharply in early Johannesburg trading following hawkish comments from various Fed governors.


TThe Rand weakened sharply, before recovering mildly in early Joburg trading.

  • The Dollar appears bid across the board, following comments from noted hawk ,
    • Jim Bullard that he prefers rates higher and for it to remain at elevated levels to cool the economy.
    • In addition, the Fed governor of Atlanta, Bostic echoed his sentiments with a call for another hike in May before a pause.
      • Both however wants rates to remain high to cool off the the US economy. 
      • They regularly cite that inflation remain above the FED 2% level and are ignoring the trends of the data.
  • Earlier this morning UK inflation surprised the market to the topside with another print above 10%. This all but confirms another BOE rate hike and sent UK yields higher.
  • The market now eagerly waiting for SA inflation at 10h00,
  • NB: a higher than expected print likely to support the ZAR as it will provide the SARB with more reasons to hike again.
  • For now ESKOM, and talks of a silent “stage8” not yet affecting the ZAR.
    • Also, as negotiations kick-off, Eskom unions wants performance bonuses, electricity allowance, danger pay – and 15% pay hike.
    • Markets will keep a close eye on this,
      • as any strikes at Eskom could plunge SA into an electricity crises beyond what we currently experiencing.

On the back of this rhetoric we expected a weaker ZAR this session.

  • USDZAR 18.2000
  • DXY 102.00
  • SP500 4143
  • GOLD 1997
  • EURUSD 1.0961

Data This week

    • Actual 10.1%
    • Actual 7.1%
    • Actual 5.2%



Market Movement Today:

  • The Rand weakened on the back of a rebound in the Dollar following more central banker  comments.
    • This time both Bullard and Bostic all but confirming more Fed hikes.
    • The result a spike in yields and a rebound in the Dollar.
    • The dollar rising across the board with Gold also remaining below $2000/oz.
  • Asian investors fretting about the news and sent stocks lower in the east.
    • All of this resulting in a “ risk off opening this morning “
  • Overall : despite the hawkish speeches the data supports lower inflation and thus lower rates.
    It appears the Fed remains behind the curve and would likely have to play catch up in H2,
    This would result in lower rates and a decline in the Dollar.

    All of this supporting a stronger ZAR and higher risk assets,

    For this session however, we expect a weaker ZAR this morning.

    But it does provide exporters with opportunities to hedge forward using the both forward and options.
    Importers can use dips in the Dollar to risk manage and hedge % of their near term exposures.

Expected Ranges:

  • USDZAR : Expect a range 18.0400-18.2800
    • Importers : 18.1200-18.0400
    • Exporters : 18.2000-18.2800
  • EURZAR : Expect a range of 20.0300-19.7900
    • Importers : 19.8700-19.7900
    • Exporters : 19.9500-20.0300
  • GBPZAR : Expect a range of 22.4300-22.7300
    • Importers : 22.5300-22.4300
    • Exporters : 22.6300-22.7300


  • USDZAR : 18.1900
  • EURZAR : 19.9400
  • GBPZAR : 22.6200


  • Former Eskom group CEO Andre de Ruyter confirmed that he will appear before Parliament’s Standing Committee on Public Accounts (Scopa) next Wednesday.
    • Scopa member Robert Alfred Lees said they were informed by the chairperson,
      • Mkhuleko Hlengwa, on Tuesday that De Ruyter would appear virtually before the committee. News24  


  • The former Steinhoff CEO did not pitch up in the Oldenburg regional court on Tuesday for his trial due to missing travel documents.
    • Judges presiding over the Markus Jooste case in Germany will now take some time to decide what to do next and this could take weeks.
    • But the prosecutor said that it was unacceptable that Jooste’s legal team didn’t sort out the issue of his missing passport, as there’d been more than enough time to do so.
    • Jooste faces criminal charges, including five counts of accounting fraud between 2011 and 2014,
      • that were reportedly committed at various subsidiaries of the company. Ewn
  • MPs worried Eskom debt relief will delay investment in renewables
    • MPs have expressed concern that some of the conditions attached to the Treasury’s debt relief plan for Eskom will “confine” the utility to generating electricity predominantly from coal.
    • The MPs said they were worried that provisions that would bar Eskom from taking on new debt and restrict capital expenditure.
    • And  would limit its ability to invest in cheaper, renewable energy generation capacity. IOL


  • US stock futures eased on Wednesday as investors weighed a fresh batch of earnings and assessed how companies are faring under an environment of persistent inflation and rising interest rates.
  • Futures contracts tied to the three major indexes were all down about 0.1%.
  • In regular trading on Tuesday, the Dow and Nasdaq Composite shed 0.03% and 0.04%, respectively, while the S&P 500 rose 0.09%.


  • US 10 Year Government Bond Yield increased to a 4-week high of 3.6138%
  • This time Bullard of St Louis calling for a terminal rate of between 5.5%-5.75% , while Raf Bostic of Atalanta , called for at least one more hike be pausing.

In the UK;

  • The yield on the UK’s 10-year Gilt touched 3.75% for the first time since March 10th,
    • Strong Wage growth and UK CPI supported expectations of a 25 basis point rate hike in May from the Bank of England.
    • The latest jobs report showed Britain’s total pay growth stood at 5.9% in the three months to February, easily beating expectations of a 5.1% increase,
  • Earlier this morning
    • UK CPI eased to 10.1% year-on-year, down from 10.4% the month before but slightly above market expectations of 9.8%.
    • The rate remained above the 10% mark for the seventh consecutive period, and well above the Bank of England’s 2% target for almost two years.
    • Thus, suggesting policymakers might continue to raise borrowing costs to combat inflation.
    • The core inflation rate, which excludes volatile items such as energy and food, was unchanged at 6.2% in March,


  • Dow fell 10 33,976
  • Sp500 added 3 to 4154
  • Nasdaq fell 4 to 12,153

  image: Trading economics


The US Dollar

  • The dollar recovered just below 102 on Wednesday as traders reassessed the outlook for Federal Reserve monetary policy.
    • In the latest Fed commentary, St. Louis Fed President James Bullard told Reuters that he favours a higher terminal rate of between 5.50% to 5.75% to subdue persistent inflation.
    • Markets are currently pricing an 86% chance the Fed would raise the fed funds rate by a quarter-point in May.
    • Investors now look ahead to the Fed’s “beige book” of economic conditions on Wednesday,
      • as well as appearances from Chicago Fed President Austan Goolsbee and New York Fed President John Williams. FX NEWS

Asian markets

  • Stocks Pressured by Fed Concerns
    • Asian equity markets mostly fell on Wednesday, facing pressure from concerns that the Fed could bring interest rates higher than previously anticipated.
    • Fed’s Bullard said he favours a higher terminal rate of between 5.5% to 5.75%, while Fed’s Bostic said he sees one more quarter point increase before pausing.
    • The Nikkei 225, Hang Seng and Shanghai Composite declined, while the S&P/ASX 200 and Kospi rose.
  • In Japan, the Nikkei 225 fell 0.35% to around 28,560, retreating from five-week highs.
    • The bourse  weighed down by losses in technology stocks amid concerns about further US interest rate rises.
    • Investors also digested data showing large Japanese manufacturing firms remained pessimistic for the fourth straight month in April.
    • Traders citing concerns as slowing global growth dimmed prospects for an export-led recovery. Reuters

Crude oil

  • US WTI crude futures steadied around $81/BL as investors weighed various demand and supply factors.
    • On Tuesday, data showed that China’s economy grew more than expected in the first quarter, boosting the demand outlook in the world’s top crude importer.
    • Chinese refineries also processed a record-high amount of crude in March.
    • This offset concerns that further US interest rate rises could dampen global economic growth and future energy demand.
    • On the supply side, OPEC+ is set to reduce output starting next month, although Russia’s crude oil exports bounced back above 3 million barrels a day last week. SOURCE  Bloomberg.


  • Gold prices edged up to $2,003/OZ on Wednesday following the recent selloff that saw prices fall more than 2% in two days.
    • Traders digested comments from US Fed officials AFTER  Bank of Atlanta President Raphael Bostic told CNBC that he favours raising rates one more time;
    • and then holding them above 5% for some time to cool inflation.
    • More comments from Fed officials are expected this week before the central bank begins its standard blackout period on April 22nd, ahead of the May FOMC meeting.
    • In Europe, the ECB chief economist backed further rate increases at the central bank’s next meeting but said its size would depend on incoming data, especially a survey of eurozone banks.
    • The Monetary Authority of Singapore last week maintained its monetary policy, joining other central banks from Australia, Canada, India, and South Korea.  Kitco metals

Copyright ©
2023 RussellStone Treasury 
All rights reserved.

Our mailing address is:

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.