23 Jan.
Absa: SA Morning Sheet.
This is a daily economic comment …
The sheets can be downloaded daily from Absa Economic Research
An extract fro today’s sheet is provided as an example:
It is a relatively quiet week on the domestic data calendar with the release of producer price inflation figures on Thursday likely to be the main focus for the local market. Although we expect headline PPI growth to have slowed further to 9.9% y/y in December from 10.1% the prior month, our forecast still translates into a 0.1% m/m uptick in factory gate prices.
Underpinning our forecast is a pick-up in the PMI price index to an index level of 83.3 in December from 82.1 in November as well as our expectation for both the agriculture and manufactured PPI food components to continue on their upward trajectory. We continue to track the trends in the latter very closely given their more direct link to CPI food prices and the fact that these take 6-9 months to filter through into retail prices. The weakness observed in the currency throughout Q4 2011 is also likely to reflect in this week’s figures, in our view.
Thankfully a pull-back in the rand oil price and global precious metal prices in the month are likely to have allowed some level of reprieve to factory gate prices in the month, however.
Other smaller releases to note this week include Stats SA’s liquidations and insolvency figures for December this afternoon and the SA Reserve Bank’s leading economic indicator for November 11 scheduled for release tomorrow morning.
Markets: The rand, together with the euro, has stopped strengthening after Greek authorities and the holders of Greek debt failed to reach consensus about how best to restructure the terms of their existing Greek bond exposure. Trade in Asia is thin this morning due to this week’s Lunar New Year celebrations, but with risk aversion creeping back into the market on the aforementioned EU debt concerns, we suspect that the rand is poised to give back some of last week’s gains. The rand was one of the best performing currencies last week and remains one of the best performing currencies year to date as result of improved levels of global risk appetite that characterized the recent week, following the release of some encouraging US data as well as some well received European bond auctions.
Although the JSE managed to gain further on Friday, there was not much movement in local bond yields on the day. We would expect bonds to continue taking their cue from the performance of the rand until Thursday’s PPI release, but still favour a flatter yield curve due to the mounting inflationary pressures, which could push up the short end of the curve. …
The sheets can be downloaded daily from Absa Economic Research
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