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Morning NOTE

GOOD MORNING

The ZAR traded in a wide range after initially gaining on the back of positive risk sentiment before reversing later in the session.

OPENING RATES

• USDZAR 18.1300
• EURZAR 17.9300
• GBPZAR 20.8700

SOUTH AFRICA

• e-TOLLS SCRAPPED !!!

  • With the fuel price hike an additional burden for already stretched consumers,
    • pressure is mounting for the Gauteng government to provide clarity on whether motorists will be refunded following the scrapping of e-tolls.
    • Finance Minister Enoch Godongwana tabled the Medium-Term Budget Policy Statement in Parliament last week, ending years of debate about the controversial tolling system.
      • Godongwana said the government would take over billions of the South African National Roads Agency’s debt. EWN
         

• FUEL HIKES

  • The Road Freight Association (RFA) says the surge in diesel prices means many consumers will stay at home and cut the lavish spending associated with the festive season.
  • November’s fuel price adjustment came into effect on Wednesday,
    • with diesel increasing by R1.42 per litre for 500ppm and R1.43 for 50ppm –
      • taking the price per litre of the two derivatives to R25.49 and R35.75 respectively. Moneyweb

• RATES REFUND

  • The financial woes of the Tshwane metro have deepened after a group of residents earlier this month won their fight to be refunded unlawfully charged property rates dating back to 2011.
    • The Pretoria High Court issued a declaratory order for the capital city to put all affected ratepayers in the same position they would have been but for the unlawful action by the administration, and to do so within 90 days. Moneyweb

GLOBAL MARKETS

Stocks:

• All about the FED.
  • US stock futures were little changed on Wednesday as investors braced for a key Federal Reserve policy decision.
    • In regular trading on Tuesday, the major averages gave up early gains to end lower, with the Dow shedding 0.24%, the S&P 500 losing 0.41% and the Nasdaq falling 0.89%.
    • Those moves came as solid US data reinforced the case for the central bank to stay with its aggressive tightening campaign.
    • The Fed is widely expected to deliver its fourth straight 75 basis point rate hike on Wednesday, while markets will be looking for guidance on its plans for December onwards.

Bonds:

• The US 10-year yield, bounced back above 4% after better-than-expected ISM Manufacturing PMI threw a little cold water on expectations that an imminent pivot is on the horizon.
  • The US central bank will likely announce a fourth straight 75 basis point rate increase on Wednesday as it seeks to bring inflation back to its 2% target.
  • However, investors have been hoping that the Fed could slow the pace of policy rate increases later this year,
  • This amid mounting evidence that tighter financial conditions are already impacting the economy while fuelling concerns about a recession.

YESTERDAY

• The Dow fell 79 to 32,625
• The SP500 fell 15 to 3,856
• The Nasdaq fell 97 to 10,988

•  Image: Trading Economics

OVERNIGHT HEADLINES

• Asian stocks traded mixed on Wednesday, while bond and currency markets struggled for direction as investors cautiously awaited the Fed’s latest policy decision.
  • While the Fed is expected to hike rates by another 75 basis points, markets will look for signals about its future tightening plans.
    • Investors also assessed mixed reports about a potential end to China’s Covid-zero policy which sent Chinese stocks to a second day of gains.
• In Japan, the Nikkei 225 shed 0.06% to close at 27,663 in mixed trade on Wednesday.
  • The benchmark remaining near their highest levels in six weeks, as investors cautiously awaited the US Federal Reserve’s latest policy decision.
    • markets will focus on its forward guidance amid speculations that it could slow the pace of rate increases soon.
  • The Yen : The Japanese yen strengthened toward 147/$ as BOJ Governor Haruhiko Kuroda hinted at a possible adjustment in the yield curve control policy “if the achievement of our 2% inflation target comes into sight.”
    • Traders also remained cautious amid speculations that Japanese authorities could intervene in the currency markets again as the US Federal Reserve is set to raise interest rates further.
    • Finance Minister Shunichi Suzuki said the government is concerned about a slow depreciation in the yen, not just volatile moves, as it raises the cost of living through higher import bills.
    • Japan’s finance ministry revealed that it spent about $43 billion between Sept. 29 to Oct. 27 to support its currency. Reuters
       
• US Dollars rallied to reach 111.5 on Wednesday, ahead of a highly-anticipated Federal Reserve policy decision.
  • While the Fed is widely expected to raise interest rates by another 75 basis points on Wednesday, markets will focus on its forward guidance amid recent speculations that it could slow the pace of rate hikes from December.
  • Meanwhile, better-than-expected ISM manufacturing data and signalled that previous rate increases have yet to dampen the economic momentum,
    • And likely to keep the Fed on course to remain aggressive.
    • The dollar weakened across the board, with the most pronounced selling activity against the yen amid concerns about another currency intervention.
      • This after Bank of Japan Governor Haruhiko Kuroda hinted at a potential shift in the yield curve control policy. FX news
         
• Crude oil and WTI crude futures rose above $89/bl  with more gains from the previous session after an industry report pointed to a big drawdown in US crude inventories.
  • The data showing that demand remains solid despite global growth concerns.
  • Data from the American Petroleum Institute showed that US crude stocks declined by about 6.5 million barrels last week, defying expectations for a build of 400,000 barrels.
    • Oil prices also jumped on Tuesday after an unverified social media post claimed that Chinese authorities are planning to exit Covid Zero, though the Chinese foreign ministry spokesperson said he was unaware of the plan.
  • Investors now await the US Federal Reserve’s latest policy decision that could affect the demand outlook.  GULF energy news
     
• Gold prices traded near $1,650 /oz, holding a recent advance as the dollar and Treasury yields stalled ahead of a key US Federal Reserve policy decision.
  • While the Fed is widely expected to raise interest rates by another 75 basis points, markets will focus on its forward guidance amid recent speculations that it could slow the pace of rate hikes soon.
  • Meanwhile, robust US jobs data and better-than-expected US factory activity signalled that previous rate increases have yet to dampen the economic momentum, keeping the Fed on course to remain aggressive.
  • Despite recent gains, Bullion remained close to its lowest levels since April 2020, remaining under pressure as a general rise in borrowing costs raise the opportunity cost of holding non-yielding bullion. Kitco metals report