All eyes are on Wednesday’s Federal Reserve Open Market Committee meeting (FOMC) at 19:00 GMT. Nerves are fraying ahead of the Fed’s expected decision to lift rates on Wednesday. Ahead of the meeting investors should have a long-term view, with capital protection as top priority, our 60 month uncapped PII continues to offer 100% protection, with greater than market performance (105% participation), adding a 40 or 60 month Capital Accumulator investment would offer diversification, in that investors would benefit from a sideways to upwards moving market. For the investor looking for short term liquidity and long term index participation the Quantum offers an impressive 15% return after one year and 55% participation in the Top40 index for five years.
Although the markets have been well prepared for this move, and it is felt that the increase in rates has been priced in at this point, it is likely that there will still be a knee-jerk reaction to the rate hike, and we expect the rand to weaken against the dollar. Most economic analysts expect two to four rate hikes over the course of next year. Our G10 analyst expects two 25bps hikes next year on top of the rate hike this week.
Chinese data released over the weekend was generally a bit better than forecast, especially November’s industrial production, which climbed 6.2% compared to calls for 5.7% and after 5.6% last time. Retail sales for November rose to an 11.2% annual rate from 11%.
President Zuma, in a statement late last night, appointed Pravin Gordhan as the new Finance Minister. Amidst calls for the removal of Zuma in the wake of Nene’s sacking, Zuma announced the new appointment. The rand reacted positively on news of Gordhan’s re-appointment, and dropped below 15.00 to the dollar.
It’s a quiet week on the local front in terms of data releases. The SARB releases the October leading indicator tomorrow at 09:00. Stats SA releases the Quarterly Employment Statistics for Q3:15 tomorrow at 11:30. Bloomberg consensus expectations are for non-farm payrolls growth to have moderated to -1.1% y/y in Q3:15 from -1.8% y/y in Q2:15. Stats SA also releases the PPI data print for November on Thursday at 11:30. Expectations are for PPI to have increased to 4.5% y/y in November from 4.2% y/y in October.
In terms of other international data releases we have US CPI coming out tomorrow and jobs figures on Thursday. In the UK we see the release of CPI data on Tuesday and jobs figures on Wednesday.
RSP would like to wish you well over the festive season. Happy Holidays!!!
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