SOUTH AFRICA: Finance Minister Set to Present Budget Amid DA Opposition
Feb-19 11:46
Finance Minister Enoch Godongwana's Budget Speech is scheduled to begin at 12:00GMT/14:00SAST.
- News24 reported earlier today that the Democratic Alliance (DA) told the Finance Minister that it would reject the budget if a hike to VAT is delivered. Local sources have suggested that a hike to VAT to as much as 17% (from the current 15%) is on the cards. In response, President Cyril Ramaphosa called an emergency Cabinet meeting.
- Talk of potential tax hikes being announced as part of the budget has grown louder over the past couple of days, with Godongwana said to have the support of ANC top brass for his proposals on that front. It remains to be seen whether the DA’s threat to oppose the budget has an effect on the policies announced this afternoon.
- The leader of the DA, John Steenhuisen, will brief the media about its stance on the budget and as well as the party’s “resolute position” when he addresses reporters after the budget speech.
Our full preview of the budget, with sell-side analyst views, can be found here.
Livestream to the budget here.
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US TSYS: Modestly Cheaper To Start Inauguration Day
Jan-20 11:45
- Cash Treasuries are closed today for Martin Luther King Day whilst futures markets are set for an early close at 1300ET.
- Focus is firmly on Trump’s inauguration, due to be sworn in at 1200ET and with eyes on executive orders that may follow. See our political risk team’s schedule for the day: https://media.marketnews.com/MNIPOLRISK_Inauguration_Day_Schedule_07a11994f9.pdf
- TYH5 pushed through Friday’s low overnight with 108-10 (currently 108-12+, -05) but still carries some of the impact from a dovish Waller on Thu and all of Wednesday’s CPI impact. Cumulative volumes are unsurprisingly extremely thin, at 165k.
- Gains are considered corrective against a medium-term bearish trend condition. Resistance is seen at 108-27+ (Jan 17 high) whilst support is seen at 108-00 (Jan 13 low).
- Fed Funds futures meanwhile price a cumulative 7.5bp of cuts for Mar, 13bp for May, 23bp for Jun, 26bp for Jul and 38bp for 2025 (the latter vs 32bp pre-CPI).
EURIBOR OPTIONS: Large Call Condor is bought for more
Jan-20 11:45
Large Condor in Euribor is still trading, multiple clips:
- ERM5 98.125/98.25/98.375/98.50c condor, bought for half in ~40k.
OUTLOOK: Price Signal Summary - Resistance In Gold Remains Exposed
Jan-20 11:42
- On the commodity front, the recent climb in Gold appears corrective - for now. However, the yellow metal continues to hold on to its latest gains and scope is seen for a continuation higher near-term. The stronger recovery exposes $2726.2, the Dec 12 high and an important resistance. Clearance of this level would be a bullish development. On the downside, a reversal lower would expose $2583.6, the Dec 19 low. Initial support is at $2649.0, the 50-day EMA.
- In the oil space, the trend structure in WTI futures remains bullish and the Jan 15 rally reinforces current conditions. The recent strong impulsive climb has resulted in a breach of $75.91, the Oct 8 high. Attention is on $79.48, the Apr 12 ‘24 high. A clear break of this hurdle would strengthen the bullish theme and open 80.63, a Fibonacci projection. On the downside, a reversal lower would expose the 20-day EMA, at $73.89, a key short-term support.
