SOUTH AFRICA: Steadier Rate Expectations Injects More Two-Way ZAR Risk
Oct-22 09:46
- The ZAR 3x6m FRA steadied on the back of today's CPI print, and may be signalling a bottoming-out of rate cut expectations through the turn of the year. The fading disinflationary impact of transport prices and accelerating food prices today will also be adding to steadier rates pricing, meaning CPI is likely to rise further in the coming months.
- This raises the focus on November 20th's SARB meeting (the last of the year), which sees pricing of a close to 60% chance for a 25bps cut. As such, two-way ZAR risk has risen on today's inflation data, particularly with the government's MTBPS likely in November - at which the Treasury may confirm a tighter, lower inflation target for the SARB.
- On the back of steadier rates pricing and the higher gold price (yesterday's corrective pullback notwithstanding), USDZAR and EURZAR could trade back toward early October lows (17.0683 and 19.8316 respectively) - although Trump's meeting with Xi in South Korea next week could be a key hurdle to further progress.
- News24 write on the inflation print: "Now it's chicken too [...] meat prices still red hot", in which they highlight the accelerating price rises for food staples, which clashes with the rise above the SARB's inflation target. While the rise in beef prices can be pinned on a recent outbreak of foot-and-mouth, higher pork, lamb and chicken prices are also contributing heavily. Housing costs also a key driver: September actual rentals rose on the quarter: 3.2% (Prev. 3.0%), with townhouse rentals up 5.4% (Prev. 4.1%).
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EU-BOND AUCTION RESULTS: EU-bond results
Sep-22 09:39
| 3.125% Dec-28 EU-bond | 3.375% Dec-35 EU-bond | 2.625% Feb-48 Green EU-bond | |
| ISIN | EU000A3K4EN5 | EU000A4D8KD2 | EU000A3K4DM9 |
| Amount | E2.1bln | E1.659bln | E1.317bln |
| Previous | E2.3bln | E1.951bln | E3bln |
| Avg yield | 2.302% | 3.189% | 3.883% |
| Previous | 2.307% | 3.119% | 3.759% |
| Bid-to-cover | 1.33x | 1.43x | 1.26x |
| Previous | 1.45x | 1.66x | |
| Avg Price | 102.504 | 101.598 | 81.408 |
| Low Price | 102.490 | 101.570 | 81.370 |
| Pre-auction mid | 102.468 | 101.495 | 81.221 |
| Prev avg price | 102.744 | 101.523 | 82.173 |
| Prev low price | 102.730 | 101.490 | |
| Prev mid-price | 102.699 | 101.422 | |
| Previous date | 19-May-25 | 25-Aug-25 | 14-Nov-23 |
EQUITY OPTIONS: Estoxx Put Seller
Sep-22 09:37
SX5E (19th Dec) 5200p, sold at 80.5. 80.3, 80.2 in 18k.
GERMAN T-BILL AUCTION RESULTS: 3/9-month Bubills
Sep-22 09:34
| Type | 3-month Bubill | 9-month Bubill |
| Maturity | Dec 10, 2025 | Jun 17, 2026 |
| Allotted | E2.3bln | E2.03bln |
| Previous | E1.595bln | E2.187bln |
| Total sold | E2.5bln | E2.5bln |
| Target | E2bln | E3bln |
| Avg yield | 1.791% | 1.954% |
| Previous | 1.839% | 1.913% |
| Bid-to-cover | 2.57x | 1.23x |
| Previous | 2.16x | 2.22x |
| Bid-to-offer | 2.36x | 1x |
| Previous | 1.72x | 1.62x |
| Previous date | Aug 25, 2025 | Aug 25, 2025 |
