ZAR: Rand Steady, Gold Ticks Higher
USD/ZAR oscillates around neutral levels, last deals at 17.3750. Bearish focus falls on Oct 9 low of 17.0683 and a break here would open up the 17.0 mark. Bulls keep an eye on Sep 4 high of 17.8190.
- China's trade surplus came in below expectations, with exports unexpectedly shrinking in October, while imports rose less than forecast. Note that Beijing is the largest buyer of South African commodities. Meanwhile, broader sentiment remains fragile as market participants scrutinise bloated tech stock valuations.
- SAGB yields retraced initial upticks but still sit marginally above neutral levels. South Africa's 5-year and 10-year breakeven inflation rates sit at 3.54% and 4.10%, respectively. The National Treasury is looking to sell 1.875% 2033, 5.125% 2043 and 2.5% 2050 linkers today.
- Bloomberg Commodity Index has added 0.6%, with the precious metals subindex up by 0.9%. Gold trades ~$32.1/oz. higher on the session.
- South Africa's gross reserves increased to $71.55bn in October from $69.74bn prior.
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SOFR: SFRZ6/H7 Lifted
SFRZ6/H7 paper paid -0.5 on ~6.6K, taken bid over for the balance of an 8K order, with another ~1.1K lots trading on the follow. Small bid left.
FRANCE: Suspension Of Pension Reform Would Risk Intra-Coalition Rancour
Caretaker Prime Minister Sebastien Lecornu, speaking outside Matignon after the first day of meetings with various political parties in an effort to break through the country's political paralysis, claims that "talks so far are showing a willingness to get this budget through by year-end". Lecornu will present his findings to President Emmanuel Macron later this evening. Adds, "Reducing the deficit is key for France's credibility."
- As noted earlier, there have been some signals that the caretaker administration is considering rolling back Macron's flagship pension reforms in order to gain support from the centre-left Socialist Party (PS).
- Lecornu says that among parties of the centre and centre right, "there is a desire to have a budget for France before December 31 of this year," adding, "This desire creates a movement and a convergence, obviously, which removes the prospects of dissolution."
- The caretaker PM meets with representatives of the PS at 09:00BST/10:00CET, the environmentalist Ecologists at 11:15BST/12:15CET and the left-wing Communists later in the day.
- Education Minister and former PM Elisabeth Borne's raising of the prospect of suspending the 2023 pension reform may draw PS support for a budget, but risks rancour with the right of the governing coalition. Arnaud Pericard, spokesperson for the centre-right Horizons, said to FranceInfo, "I understand that it is being put forward, but it is not a good idea," with the conservative Les Republicans (LR) also likely to object. Should Horizons and LR vote down (rather than abstain) on any repeal, their votes would outweigh those of the PS.
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