SOUTH AFRICA: DA Refuses To Support Budget Despite VAT Hike Reduction
Mar-13 07:27
- Finance Minister Enoch Godongwana delivered his 2025 Budget Speech despite the lack of support from any parliamentary majority, proposing a phased VAT hike by 0.5p this year and by another 0.5pp in 2026. The leaders of the Democratic Alliance (DA), Economic Freedom Fighters (EFF) and uMkhonto weSizwe (MK) and several smaller parties said that they could not back the spending plan. Godongwana said that the Treasury "thoroughly examined alternatives to raising the VAT rate" but could not abandon it entirely, opting for a reduced increase instead.
- TimesLIVE reported that DA leaders would meet in the coming days to discuss a way forward as questions about their continued participation in the Government of National Unity (GNU) continue to do the rounds. Meanwhile, during a News24 event this morning, Godongwana said that South Africa has a political problem rather than a budget problem. He accused the DA of politicking, prioritising partisan interest and breaching "all the protocols of the Cabinet."
- Reports surrounding budget negotiations pointed to a breach of trust, which may affect cooperation between GNU parties regardless of the outcome. Tensions will likely resurface during the parliamentary debate on the 2025 Budget and there is considerable uncertainty around the capacity of GNU parties to compromise.
- South Africa's January mining data will cross the wires at 09:30GMT/11:30SAST, with manufacturing output coming up at 11:00GMT/13:00SAST.
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USD: Finding a bid into the European session
Feb-11 07:27
- Looking at the Overnight session for the Dollar against G10, overall it was a steady flat session, the Kiwi was the best performer, albeit just up a tiny 0.16% and at the other end, the CAD was down 0.08%.
- Since the European Cash Govie open, the Dollar is seeing a bid emerging, European Desks are catching up with the Overnight news, but also note that we have some heavy Bond supply today, which should weigh on Futures.
- The CAD is now down 0.14%, and broader offers are going through the ILS, GBP, MXN, CHF and ZAR, all testing their respective tight traded low.
BUNDS: Heavy suppply and Fed Powell are in focus Today
Feb-11 07:17
- There's very little change for Bund, although the overnight session sees a slightly wider range, volumes on both sides of the Atlantic are on the low side.
- Bund and Tnotes are offered, after Trump ordered a 25% Tariff on all Steel and Aluminium Imports, but the German contract remains within the Initial support of 132.72 and resistance at 133.86.
- For the US 10yr, TYH5 is testing trendline right here at 109.03, although most desks will look for immediate support at 109.01, the fast market printed low, post NFP.
- This is a lighter Week on the Data front, with the US CPI (Wednesday) the key release, and for the UK, GDP (Thursday).
- There's no notable Data due for today.
- BoE Mann gave an Interview with the FT Yesterday, so today could be a lesser event, attention will be on Powell who testifies at the Senate.
- SUPPLY: Early focus will be on supply in Europe and later in the US, Netherlands €2bn 2047 (equates to 30.3k Bund) should weigh, Germany €5bn Bobl (equates to ~47.5k Bobl) will weigh. US Sells $58bn of 3yr Notes.
- SYNDICATION: EU 2031 Tap/2050 Green, Italy 2040, UK 2035.
- SPEAKERS: BoE Mann, Bailey, Fed Powell, Hammack, Williams, Bowman, ECB Schnabel.
MNI: NORWAY Q4 MAINLAND GDP -0.4% Q/Q
Feb-11 07:07
- MNI: NORWAY Q4 MAINLAND GDP -0.4% Q/Q
