Several Central Banks are expected to deliver their last policy announcements for this year over the coming days, while Moody’s issued their scheduled South Africa review, deciding to leave their outlook at ‘stable.’
International Market Developments
The US November CPI will be in focus on Wednesday of this week, with a market consensus at 2.7% y/y, from 2.6% y/y in October. The CPI print will be an important piece of the puzzle for the FOMC when it comes to its 18 December policy announcement. Some FOMC members have indicated they have not yet made up their mind on their preferred course of action, while others are more hawkish. The market is currently pricing in a 75% chance of a 25bp cut in the Fed funds target rate, with a 25% chance of rates remaining on hold.
Middle Eastern politics dominated the headlines over the weekend following a lightning offensive by rebel opposition groups which captured various key Syrian cities, including the capital Damascus and which saw President Bashar al-Assad flee to Moscow. Oil prices nudged higher on Monday, prompted by the heightened uncertainty.
Local Market Developments
Moody’s provided their scheduled country review on South Africa, leaving the outlook at stable, which implies neither a credit rating upgrade nor downgrade is currently likely for around the next eighteen months. Moody’s affirmed its Ba2 rating. This came shortly after S&P unexpectedly revised their outlook on South Africa’s local (BB) and foreign currency (BB-) from stable to positive in its bi-annual review.
Last week’s GDP numbers for Q3:24 suggested that the South African economy had contracted 0.3% q/q , against expectations for an increase, after having registered a downwardly revised 0.3% growth q/q in Q2:24. GDP growth was up by 0.4% y/y in Q3:24, from 0.3% y/y in Q2:24. Four industries recorded negative growth in Q3:24, with the agricultural sector the largest negative contributor, contracting by 28.8% q/q, subtracting 0.7 of a percentage point from overall growth number. This was primarily due to decreased economic activities reported for field crops. The transport sector decreased by 1.6% q/q in Q3:24 and subtracted 0.1 of a percentage point.
Local CPI for November is scheduled for release on Wednesday and is expected to be at 3.1% y/y, from 2.8% y/y in October.