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Morning NOTE

22 June 2022


The ZAR remained in its range after reaching 15.8800 in Joburg trading, only to return back to 16.0000 in Asian trading.


  • The Rand continues to range trade ahead of today’s testimony by Fed chair Jerome Powell.

    • The local unit returning to the “mean” R16/$ level after reaching the bottom end of the USDZAR range of 15.8600 before rebounding.
  • Stocks also lower in Asia, after a strong showing in New York.

    • Yesterday Equities rallied in New York after TESLA gained 11% following comments by Elon Musk that he would reduce his workforce by 3.5%.
    • The SP500 rallied on the news, (TESLA has the largest market cap in the index) before falling short of 3800.
    • Stocks the drifted lower as global inflationary worries resurfaced as well as concerns about the health of the global economy following disturbing news out of Germany.
  • Germany announced  the country reached 58% of gas inventories and is about to implement emergency gas rationing also hit markets.

    • The continued efforts to cut off all Russian Gas and Energy supplies continues to rock global markets, and provides a Bid for oil prices.
    • The US Dollar being the primary benefactor as investors once again looked to buy the US Dollar, as shown by the drop in 10YT yields to 3.23%.

On the data front:

  • 10h00: SA INFLATION 6% expected vs 5.9% previous YOY
  • 10h00: SA Core INFLATION 4% vs 3.9% previous YOY
  • 14h30 : Fed CHAIR Jerome Powell starts his 2 day testimony to the US congress on the state of the US economy.

    • NB: will once again likely to lead to increased volatility in financial markets.
  • Today :

    • Expect range trading to continue around 16 the figure.
    • However, after testing the low side (15.8800), there remains a possibility that the ZAR could test the weaker side of the range at 16.1000.
    • The pivot however remains R16.00/$

      • Liquidity conditions have improved and any comments by Powell could see “real money” provide momentum in favour of this bias.
      • After yesterday’s Risk rally, be open to a move where stocks open under pressure and we have the possibility of a weaker ZAR this session.
  • KEY RISK SA INFLATION – Higher than expected could see ZAR Gains, as the SARB will most certainly be hawkish in its monetary policy given we are at the top of 3-6% band.

    Lower than expected, could see ZAR weakness as it might prompt the SARB to slowdown , thus affecting the “CARRY ADVANTAGE” of the ZAR. 

  • USDZAR :  Expect a range 15.8000-16.0800
    • Importers 15.8800-15.8000
    • Exporters 15.9900-16.0800 
  • EURZAR :  Expect a range of 16.6500-16.9200

    • Importers 16.7000-16.6500
    • Exporters 16.8200-16.9200
  • GBPZAR :  Expect a range of 19.4000-19.6900

    • Importers 19.4800-19.4000
    • Exporters 19.6300-19.6900


  • USDZAR 15.9700
  • EURZAR 16.7800
  • GBPZAR 19.5500


  • Eskom load shedding is back !

    • Eskom will implement Stage 2 load shedding between 10:00 and midnight on Wednesday, and between 05:00 and midnight from Thursday to Sunday.
    • The SOE and power utility said a breakdown of 4 generation units was to blame for the forced implementation which contributed to the capacity constraints.
    • Also, Eskom CEO,  De Ruyter said there is an opportunity to roll out renewables in Mpumalanga, which has good solar and wind resources and can ensure easy access to the grid.
    • Expanding the transmission network will be costly, which is why it is essential to enable access to the existing infrastructure by repurposing old power stations, says De Ruyter. NEWS 24
  • ANC president Cyril Ramaphosa survived another week in his party, without it interrogating the burglary at his Phala Phala farm in Bela Bela .

    • ANC officials (CR allies) continue to fight against any investigations).
    • However, one official did say “We don’t want to commit the same mistake we did with Nkandla and the swimming pool, we are not just going to report it willy-nilly”.
    • Ramaphosa is facing possibly one of the toughest scandals since assuming power.

      • This as calls in some quarters for the president to step aside from his role in both government and in the party. EWN
  • Striking mine workers also refuse to work until their wage demands have been met.

    • The strikers in Rustenburg, affiliated with Numsa met in Freedom Park near Rustenburg on Tuesday where they called for increased wages and additional benefits such as medical . EWN



  • Global stock futures all lower in Asian trade on Wednesday after the major averages rallied overnight.

    • In regular trading on Tuesday, the Dow gained 2.15%, the S&P 500 jumped 2.45% and the Nasdaq Composite rallied 2.51%.
    • All sectors participated in the market rebound, led by the energy, consumer discretionary and consumer staples sectors.
    • Notable gainers include Exxon Mobil (6.2%), Tesla (9.4%) and Walmart (3.3%).
    • However, investors bracing for further volatility in equities, as Fed Chair Jerome Powell is set to testify before Congress on Wednesday and Thursday.


  • The 10-year US Treasury note yield tumbled below the 3.3% level as investors rushed into safe-haven assets.

    • Investors remain concerned that aggressive tightening from central banks could tip economies into a recession.
    • News of Germany’s energy situation also a cause for concern as safe haven buying sparked a rush into the Greenback.
  • The Fed raised its target interest rate by 75 bps on Wednesday to address the highest inflation seen since late 1981.

    • They also appear unconcerned when  projecting a slowing economy and rising unemployment in the months to come.
    • On top of that, the  RBA , BoE , BOC , SARB and the biggest surprise the SNB all raised rates.
    • Investors remain on edge as the actions sparking worries that other central banks could consider raising rates higher and faster.
  • RISK : Powell’s testimony today.


  • The Dow rallied 641 to 30,530
  • The SP500 gained 89 to 3,764
  • The Nasdaq  gained 270 to 11,069

Futures Trading:

  • image : Trading economics

  • Asian markets lower following the strong reversal on Wall Street.

    • In Japan, the Nikkei 225 Index fell 0.37% to close at 26,149, reversing gains from earlier in the session and tracking a slide in US equity futures.

      • As fears that aggressive monetary tightening could lead to a global recession weighed on investor sentiment.

        • Meanwhile, BOJ officials agreed to no change in its stance of taking additional easing steps without hesitation, if needed, minutes of its last meeting showed.
      • They also acknowledged the repercussions of a weak yen to businesses and the broader economy, but debated against directly addressing the currency markets.

        • Sharp losses were seen from index heavyweights.
      • Meanwhile, healthcare firms and automakers bucked the trend and eked out some gains.
  • Brent crude futures fell more than 5% toward $108/bl before recovering to $110/bl after news of Germany’s Gas problems resurfaced.

    • Traders remain worried about concerns that rising US interest rates aimed at curbing soaring inflation would cause a demand slowdown.
    • US President Joe Biden is also expected to call for a gasoline tax holiday and is set to meet with seven large oil companies this week amid a campaign to drive down fuel prices.
    • Supply disruptions caused by the war in Ukraine and OPEC’s failure to pump more crude due to underinvestment also kept upward pressure on oil prices.
    • Analysts argued that Fed-induced slowdowns are a short-term solution to surging prices, but will not solve the problem of supply tightness. Energy News
  • Gold fell below $1,830/oz and in turn sliding for the 4th straight session as the Dollar firmed, while investors awaited fresh cues from the Federal Reserve on the likely direction of US monetary policy.

    • The metal has declined nearly 2% from a week ago amid a global wave of interest rate increases aimed at bringing inflation down, led by the US central bank’s 75 basis point rate hike.
    • Market participants are now eyeing Fed Chair Jerome Powell’s appearance before Congress on Wednesday and Thursday for fresh insight on the central bank’s policy plans.
    • Analysts expect the Fed to deliver another 75 basis point rate hike in July, followed by a 50 basis point increase in September.
    • Traders worried on news that GOLD  could be among assets that may be targeted in a possible next round of European Union sanctions on Russia, a draft document showed. KITCO METALS
  • US Dollar rose above 104.80 and in turn, recouping some losses from previous sessions and inching towards a 20-year high reached last week as expectations.

    • The Fed will continue to aggressively tighten monetary settings supported the currency.
    • The US central bank raised its benchmark interest rate by 75 basis points last week, the largest increase since 1994, as it seeks to bring inflation under control.
    • Investors are now awaiting the Hawkins testimony of Powell  Congress on Wednesday and Thursday for fresh insight on the central bank’s future policy plans.
    • Analysts expect the Fed to deliver another 75 basis point rate hike in July, followed by a 50 basis point increase in September.
    • The dollar also benefited from safe-haven inflows spurred by fears of a global economic slowdown.

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

Cases / Deaths / Recoveries

  • WORLD 545,863,833 / 6,343,809 / 521,837,532
  • USA 88,244,870 / 1,038,900 / 3,165,493
  • SA 3,987,979 / 101,640 / 3,872,768

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