06 Feb.
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 another relatively busy week on the local data front, kicking off with the release of the SA Reserve Bank’s gross gold and foreign exchange reserve position and labour market figures on Tuesday, followed by mining and manufacturing production data on Thursday. We lie at the higher end of Bloomberg consensus forecasts (cf. USD49.2bn) in expecting gross reserves to have ticked up to USD51.3bn in January from USD48.bn in December. The USD1.5bn 12-year global bond issued by National Treasury on 9 January is likely to account for the bulk of the uptick, while a strong rebound in the USD gold price and a weaker dollar against the majors in the month are likely to have also added to gross reserves. Although we have seen significant strength in the rand in the opening weeks of 2012 (the ZAR remains one of the best performing EM currencies YTD), a still concerning domestic inflation trajectory and uncertain global backdrop is likely to have resulted in relatively limited FX intervention by authorities, in our view.
Statistics South Africa’s release of its Q4 Quarterly Labour Force Survey (QLFS) is likely to show a further small improvement in domestic labour market conditions. The usual seasonal increases in employment and some stabilisation in supply-side activity observed throughout this period underpin this expectation.
We look for manufacturing production growth on Thursday to have remained subdued in December on the back of a deterioration in both global and local PMIs in the month as well as subdued growth in new vehicle sales and exports. Our 2.7% y/y forecast for production growth in December lies marginally above Bloomberg median consensus estimates which looks for y/y growth to have tracked sideways at 2.6%.
On the events front, South African President Jacob Zuma will deliver his State of the Nation Address to Parliament on Thursday evening.
Markets: Rand bulls remained firmly in command on Friday as the rand strengthened to just shy of the R7.50 mark in relation to the dollar – a fresh five-month high. Friday’s better-than-expected US employment report data was the catalyst for the extended rand recovery, because risky assets were enthused by better prospects for global growth associated with the US data. This morning all eyes will be back on Greece, which has until 11am to indicate to EU officials how it plans to further reduce its budget deficits. Although Greek officials indicate that they reached a tentative agreement over the weekend, failure to satisfy EU officials this morning could jeopardize the much needed $14.5bn financial aid that Greece is looking to obtain from the EU by mid- March for some of its existing bond repayment commitments.
We saw some pre-weekend profit taking in the bond market and swap rates ticked a bit higher on the day, but given that the rand has managed to sustain its recent gains we believe that the risk lies in a renewed downtick in SA bond yields and simultaneously receiving interest in the swaps this morning, especially if Greece manages to meet this morning’s EU deadline. …
The sheets can be downloaded daily from Absa Economic Research
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