Rand update

US inflation is remaining persistently high, raising the prospect of aggressive Fed rate hikes and keeping the dollar on the front foot. US CPI grew by 8.3% YoY versus market estimates of 8.1%, but the concern was more around Core CPI, which jumped by 0.6% MoM versus the expected 0.3%. The rand, which had firmed to below R16.00 earlier, weakened to R16.17 levels post the CPI data, before eventually closing firmer at R16.09 on the day. This morning we see increased risk aversion as the dollar strengthens further, and we have the rand trading sharply weaker at R16.21.

Commodity update

Gold and platinum ended stronger yesterday while palladium closed softer. This morning all three metals are trading weaker on the back of the firmer dollar. Gold is currently at $1,851, platinum at $984, and palladium is at $2,027. Fears of a global recession are weighing on commodity prices. Brent crude jumped nearly 6.0% yesterday as the EU ban on Russian oil comes ever closer. Brent has lost around 1.0% this morning and is trading at $106.30, while WTI is at $104.50.

International update

US Treasury yields initially jumped on the back of the US inflation number but slipped back to close lower on the day. This morning yields have traded even lower, with the 30y-yield now at 3.04% and the 10y-yield at 2.90%. The DXY index is back above 104.00 as the pound has collapsed to 1.2210, and the euro is down at 1.0510 against the dollar.

US PPI data, which could provide clues to the inflation trajectory, will be released later today. Equity markets remain under the cosh as inflationary pressure, and monetary policy tightening weighs. The S&P lost 1.65%, the Dow was 1.02% lower, and the Nasdaq ended 3.18% weaker. US futures had opened in the green this morning but have now turned negative, while Asian-Pacific markets are all weaker.

For more information, visit the TreasuryONE website.