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Morning NOTE

14 June 2022


The ZAR continued to weaken on the back of global de-risking following a spike in US treasury yields.


  • The Rand weakened to 16.1800, following a global market sell-off.
    • Stocks, Bonds and EMFX all suffering as investors moved back into the safe-haven Dollar.
    • Markets on edge after JP Morgan said they expect the FED to raise rates by 75bps, after Friday’s HIGH CPI print, the highest since 1981.
    • US 10YR’s spiking to 3.29% .
  • The market now turning its attention to a heavy data calendar ahead of tomorrows FED rate decision.

On the data front :

  • Today:
    • 14h30 US CORE PPI expected 8.6% vs 8.8% previous YOY
    • 14h30 US PPI expected 10.9% vs 11% previous
  • Wednesday

    • 13h00 SA retail sales 1.6% expected vs 1.3% previous
    • 14h30 US retail sales May 7.1% expected vs 8.2% previous
    • 20H30 : FED PRESS CONFERENCE : The language will be on critical importance.

  • Today :
    • The ZAR remains under pressure following Friday’s high US CPI and spike in US yields ahead of tomorrows FED decision.
      • Analysts all calling for hikes exceeding the FED’s 50bps, with some calling for 75 to 100bps.
      • The ZAR on the back foot in a rising US rate environment, we eagerly await the FOMC on Wednesday.
    • However, the chances (albeit SLIM), exists for a Turn around Tuesday.  

Below 16.000 towards 15.8000 are GOOD short term covering opportunities for importers.

Above 16.1500- 16.3500 good levels for EXPORTERS

  • USDZAR :  Expect a range 15.7600-16.3500
    • Importers 15.9700-15.7600
    • Exporters 16.1500-16.3500
  • EURZAR :  Expect a range of 16.5800-16.8800
    • Importers 16.6600-16.5800
    • Exporters 16.8200-16.8800
  • GBPZAR :  Expect a range of 19.3700-19.8200
    • Importers 19.4800-19.3700
    • Exporters 19.6100-19.8200


  • USDZAR 16.0200
  • EURZAR 16.7000
  • GBPZAR 19.5100


  • ESKOM investigating if the fire that broke out at the Duvha plant was accidental or an act of sabotage.
    • Eskom has been battling theft, vandalism and sabotage as it struggles to keep the lights on. Late last month, theft and vandalism in Vanderbijlpark saw fire break out as two substations were targeted.
    • The cause of Monday’s fire at Duvha is still unknown.
    • “Eskom is currently investigating the root cause of the fire, and the extent of the damage and the possible return to service,” Mantshantsha said. News24
  • Pressure continues to build on Ramaphosa, as Niehaus and Magashule lays criminal charges against him.

    • Some members, including suspended African National Congress (ANC) secretary-general Ace Magashule’s ally, Carl Niehaus, have also laid a criminal complaint against Ramaphosa.
    • An internal campaign in the African National Congress (ANC) for the party to part ways with its president, Cyril Ramaphosa continues.
    • All the while, Ramaphosa – who is also head of state – is yet to give proper insights into the 2020 robbery at his Phala Phala farm in Limpopo.
    • He’s also refused to divulge how much money was stolen and what currency the money was in. IOL
  • African Rainbow Energy and Power, is looking to get South Africa’s renewable energy plans up and running again as it aims to become one of the largest providers of renewable energy on the African continent.
    • The company, which is backed by South African billionaire Patrice Motsepe, is aiming to add 5,000MW of assets and boost its renewable energy output by sevenfold.
    • A new report by Meridian Economics, specialists in economics and energy advisory, claims that South Africa could’ve experienced 96.5% less load shedding in 2021.
    • If it had not stalled the Renewable Energy Independent Power Producer Program (REIPPP) in 2016. EWN



  • The 2022 stock sell-off intensified on Monday with the S&P 500 tumbling to a fresh low for the year and closing in bear market territory as recession fears grew ahead of this week’s key Federal Reserve meeting.
    • In regular trading on Monday, the S&P 500 tumbled 3.9% and is down 21% from its January record.
    • The Dow also declined 2.8% and is roughly 17% off its record high, while the Nasdaq Composite slumped 4.7% or more than 33% off its November record. 
  • The benchmark closed in bear market territory (down more than 20% from its high) after trading there briefly on an intraday basis about three weeks ago.
    • Some on Wall Street say it’s not an official bear market until the index closes there and that’s what happened on Monday.
    • The last time stocks were in a bear market was in March 2020 at the onset of the pandemic.


  • The yield on the US 10-year bond rose to above 3.35%, the highest since 2011 as investors raised bets on even bigger interest rate hikes by the Federal Reserve after last week’s May inflation report.
  • US consumer prices unexpectedly accelerated to 8.6% in May, the highest since December of 1981 and compared to market forecasts of 8.3%.
  • Money markets are now pricing two half-point and one 75 basis-point hike by September.
  • Meanwhile, the 2-year and 10-year Treasury yield curves briefly inverted for the first time since early April, signalling a higher risk of a recession.


  • The Dow lost 876 to 30,516
  • The SP500 declined 151 to 3,749
  • The Nasdaq  fell to 530 to 10,809

Futures Trading:

  • image : Trading economics


  • Asian markets fell following the big wipe on Wallstreet. Markets firmly focussed on the FED’s FOMC rate decision.
    • In Japan, the Nikkei 225, fell to its lowest levels in about three weeks and tracking sharp losses on Wall Street.
    • Traders pointing to surging inflation will likely push the Federal Reserve to consider a larger-than-expected 75 basis point rate hike this week.
    • Analysts warned that an aggressive move could tilt the US economy into a recession, with the current inversion in the US yield curve indicating such a risk.
    • Japanese technology stocks sold off following similar moves on the Nasdaq, with sharp losses from SoftBank Group (-2.6%).
    • SUPPLY : A drop in Libyan oil exports amid a political unrest that has hit output and ports exacerbated supply tightness,
      • …at a time other OPEC+ producers are struggling to meet their output targets and Russia is facing bans on its oil over the war in Ukraine.
    • DEMAND :  a Covid outbreak at a bar in Beijing stoked fears of fresh lockdowns just as restrictions were being eased.
      • Investors are also weighing the impact of a possible recession on energy demand, with elevated inflation readings likely to push the Federal Reserve to consider a bigger 75 basis point rate hike this week.
      • Meanwhile, markets await weekly US inventory data from the API on Tuesday and EIA on Wednesday for clues on how tight crude and fuel supply remain. Energy News
  • Gold hovered near 4-week lows around $1,820/oz Tuesday after falling nearly 3% in the previous session.
    • The yellow metal facing headwinds from a from a rallying dollar and Treasury yields as investors brace for an even more aggressive monetary policy tightening.
      • The Federal Reserve is likely to consider surprising markets with a larger-than-expected 75 basis point rate increase at their meeting this week after a string of troubling inflation readings, the WSJ reported on Monday.
      • Aggressive rate hike expectations also stoked fears of a recession in the world’s largest economy, driving further selling and forced liquidation across financial markets, including gold.
      • Looking ahead, analysts see further downside for bullion as investors continue to de-risk due to inflation and growth concerns. Kitco Metals
    • The Buck boosted by fears of a global economic slowdown and expectations that the FOMC would need to raise rates higher and faster to fight soaring inflation.
    • The Fed was expected to deliver its second straight half-point rate increase on Wednesday;
    • However economists from a major US Bank suggested the central bank could consider surprising markets with a larger-than-expected 0.75-percentage-point interest rate hike.
    • Investors will also be watching moves from other major central banks, with the Bank of England set to lift interest rates again, while the Swiss National Bank prepares to start its tightening cycle.
    • Meanwhile, the Bank of Japan is expected to retain its ultra-dovish stance despite a rapidly falling yen.  FX news
  • Crypto

    • Bitcoin followed risk assets lower, following global market sell-off on Monday and Friday.
      • BTC/USD traded at 22,280.9 this Tuesday June 14th, decreasing 6,908.8 or 23.67 percent since the previous trading session.
      • In addition, the crypto verse remains under pressure, in Asia before bouncing back slightly, continuing its plunge as investors sold off risk assets.
      • The world’s largest cryptocurrency fell nearly 14% in the past 24 hours, while Ethereum tumbled more than 12% over the same period, according to Coinbase data.
      • Crypto assets were hammered on Monday as trading platforms such as Celsius and Binance stopped withdrawals, and some companies cut jobs. CNBC

COVID-19 SOURCE https://www.worldometers.info/coronavirus/

Cases / Deaths / Recoveries

  • WORLD 541,110,918 / 6,332,618 / 516,463,284
  • USA 87,424,846 / 1,036,084 / 83,245,798
  • SA 3,979,126 / 101,509 / 3,856,957

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