BER Weekly
BER Weekly, 15 July 2019
Last updated: Jul 15 2019 9:52AM
Last week was relatively quiet on the domestic data front. Mining and manufacturing output were mixed, but both sectors are set to recover in 2019Q2 after a poor first quarter. This should ensure a much improved GDP print in Q2.
Internationally, trade
read moreLast week was relatively quiet on the domestic data front. Mining and manufacturing output were mixed, but both sectors are set to recover in 2019Q2 after a poor first quarter. This should ensure a much improved GDP print in Q2.
Internationally, trade numbers in China are showing the effects of the trade dispute with the US, while economic growth in China slowed to the slowest rate in at least 27 years. Meanwhile, industrial output in the Eurozone picked up slightly in May, the first improvement in four months. In financial markets, the dollar remained under pressure as a July cut in the US policy interest rate seems ever more likely.
This week, the domestic economic calendar is dominated by the SA Reserve Bank’s (SARB) Monetary Policy Committee (MPC) interest rate decision on Thursday. The combination of a further deterioration in the real GDP growth outlook since the previous MPC meeting in May, continued subdued consumer inflation prints and the dovish global monetary policy tilt towards renewed stimulus should result in a 25bps interest rate reduction. This would reduce the repo rate to 6.50% and be the first policy rate drop since March 2018.
BER Weekly, 8 July 2019
Last updated: Jul 8 2019 10:20AM
During last week, the rand continued to strengthen and even dipped below R14/$ mid-week. However, the tide turned after the release of better-than-expected US nonfarm payrolls figures from the US. The jobs data is discussed in the international section, along
read moreDuring last week, the rand continued to strengthen and even dipped below R14/$ mid-week. However, the tide turned after the release of better-than-expected US nonfarm payrolls figures from the US. The jobs data is discussed in the international section, along with manufacturing Purchasing Managers’ Index (PMI) figures from Europe and the US. International PMIs – including the China PMI discussed last week - are broadly trending lower on the back of slowing new orders. This resulted in the global manufacturing PMI slumping to an almost seven-year low in June.
The domestic focus is on the latest manufacturing PMI from South Africa, as well as vehicle sales figures in what was otherwise another quiet week on the domestic data front. Both sets of data turned out weak in June.
BER Weekly, 1 July 2019
Last updated: Jul 1 2019 10:17AM
It was a fairly quiet week on the domestic data front with South African financial markets dominated by the further strengthening of the rand exchange rate. In the domestic section, we unpack the latest producer price trends, labour market developments as
read moreIt was a fairly quiet week on the domestic data front with South African financial markets dominated by the further strengthening of the rand exchange rate. In the domestic section, we unpack the latest producer price trends, labour market developments as well as May’s trade balance.
Internationally, the focus is on a variety of data releases from Europe, US, China and Japan. Inflation data from the Eurozone and US came in well below their respective central bank’s inflation targets. This supports the recent more dovish stance by both central banks. Indeed, increased bets on pending US rate cuts contributed to a weaker dollar. This provided a welcome boost to the rand.
BER Weekly, 24 June 2019
Last updated: Jun 24 2019 12:06PM
Emerging market assets, including the rand exchange rate, benefitted handsomely last week from more dovish-than-expected monetary policy outlooks from the US and European central banks. If it was not for some disappointment that President Ramaphosa’s State of
read moreEmerging market assets, including the rand exchange rate, benefitted handsomely last week from more dovish-than-expected monetary policy outlooks from the US and European central banks. If it was not for some disappointment that President Ramaphosa’s State of the Nation Address (SONA) lacked concrete details on how Eskom will be brought back to a sustainable financial position, domestic assets may have gained even more.
On the domestic data front, the case for an interest rate cut next month was bolstered by the latest consumer inflation print for May which, while somewhat up from April, remained well contained. This, as well as some initial thoughts on the SONA, is discussed in more detail here.
As mentioned, internationally the focus was on advanced country monetary policy meetings. The central banks of the US, Japan and the UK all kept their respective policy rates unchanged. However, the sentiment is becoming increasingly dovish and in the case of the US, Japan and Europe, there is a growing likelihood of an interest rate cut before the end of the year.
BER Weekly, 14 June 2019
Last updated: Jun 14 2019 11:52AM
Domestic economic data for April surprised on the upside this week, quelling fears of a technical recession (two consecutive quarterly contractions in GDP). However, business sentiment data suggests that the recovery may not be sustained throughout 2019Q2.
read moreDomestic economic data for April surprised on the upside this week, quelling fears of a technical recession (two consecutive quarterly contractions in GDP). However, business sentiment data suggests that the recovery may not be sustained throughout 2019Q2. Meanwhile, on the international front, consumer inflation data in the US continued to make a case for an interest rate cut later this year, while data from China was mixed.
BER Weekly, 10 June 2019
Last updated: Jun 10 2019 9:09AM
Domestic financial markets were rattled last week after the release of much weaker-than-expected 2019Q1 GDP figures and mixed messages from the ANC on the mandate of the SA Reserve Bank (SARB). The rand exchange rate weakened significantly through the week.
read moreDomestic financial markets were rattled last week after the release of much weaker-than-expected 2019Q1 GDP figures and mixed messages from the ANC on the mandate of the SA Reserve Bank (SARB). The rand exchange rate weakened significantly through the week. Incoming data for the second quarter, including vehicle sales and the Absa Purchasing Managers’ Index (PMI) figures, do not inspire confidence in a strong bounce-back in Q2 GDP. Combined, the weak data necessitated a downward adjustment to our outlook for full-year real GDP growth. On the international front we discuss the dovish turn in international monetary policy, with reference to interest rate decisions from across the globe.
BER Weekly, 3 June 2019
Last updated: Jun 3 2019 9:09AM
Last week, domestic market focus was on SA political developments as President Cyril Ramaphosa announced his cabinet on Wednesday evening. The cabinet was generally well received, but we remain sceptical as to the willingness and ability of the new cabinet to
read moreLast week, domestic market focus was on SA political developments as President Cyril Ramaphosa announced his cabinet on Wednesday evening. The cabinet was generally well received, but we remain sceptical as to the willingness and ability of the new cabinet to deliver pro-growth policy reforms. In other domestic news, we unpack the latest FNB/BER Consumer Confidence Index (CCI), producer price inflation and trade statistics. On the international front, data releases from the US, Europe and China take centre stage.
BER Weekly, 27 May 2019
Last updated: May 27 2019 7:49AM
The key domestic event last week was the MPC decision on the policy interest rate. As expected, the rate was kept unchanged, but with a more dovish bias.
BER Weekly, 20 May 2019
Last updated: May 20 2019 11:37AM
Domestic data released last week confirmed that SA GDP most likely contracted in the first quarter, the question is how large the decline will be. The unemployment rate increased in 2019Q1, with notable job losses in the formal sector of the economy, while
read moreDomestic data released last week confirmed that SA GDP most likely contracted in the first quarter, the question is how large the decline will be. The unemployment rate increased in 2019Q1, with notable job losses in the formal sector of the economy, while retail, wholesale and motor sales all contracted in the first quarter.
Internationally, indications are that economic growth is also slowing down in China, while Germany experienced a slight rebound. The trade dispute between the US and China is partly to blame for China’s woes and given the current tension, could escalate and have more dire consequences. On the political front, populist parties are expected to gain more seats in the EU parliamentary elections this week. Meanwhile, in financial markets, currencies and share prices were also affected by the US-China trade tensions.
BER Weekly, 13 May 2019
Last updated: May 13 2019 11:40AM
The key event over the past week was the national and provincial election on 8 May. The results point to relative stability and are unpacked in the current affairs section below. Generally, the election outcome was welcomed by the markets. However, this more
read moreThe key event over the past week was the national and provincial election on 8 May. The results point to relative stability and are unpacked in the current affairs section below. Generally, the election outcome was welcomed by the markets. However, this more positive sentiment was to some extent overshadowed by a further escalation of the trade tension between the US and China. As such, in the international section, the focus is on recent trade data from China and the US. The data is against the backdrop of scheduled trade negotiations between the two countries that took place last week. Talks continued despite the US imposing even higher tariffs on Chinese goods from Friday and China stating it would implement the “necessary countermeasures” in return.
Finally, domestic activity data for March surprised on the upside, but still suggests that the economy is likely to contract sharply in 2019Q1.