USD = R18.64  AUD = R12.26
GBP = R22.02  DXY = 105.82
EUR = R19.63Brent Crude = $83.46 per barrel

Tuesday was a bruising day for risk assets and the Rand was not spared with local and international headlines sending us plummeting.  We opened the day at R18.23 to the Dollar and by the evening session had fallen to R18.63, a shocker of a day.

The following is from Business Day:  The Rand touched its weakest level in four months on Tuesday after news that SA’s economy performed far worse than expected in the fourth quarter.  Citadel chief economist Maarten Ackerman said it was clear from overall GDP figures for 2022 that “industries like mining, construction, electricity and manufacturing were all in the red — and that is really the strongest job creation side of the economy”.

US economists see higher odds that the Federal Reserve could re-accelerate the scale of its rate increases this month after Chair Jerome Powell spoke before Congress on Tuesday, with some emphasizing it will depend on the strength of incoming data. In his most hawkish speech since Jackson Hole, Fed Chair Powell made it very clear: if economic data keeps coming in as hot as February, the Fed will not only hike higher for longer, but may revert back to 50bps rate hikes (or even higher) at the next FOMC.

An inverted yield curve occurs when yields on shorter-dated Treasuries rise above those for longer-term ones. It suggests that while investors expect interest rates to rise in the near term, they believe that higher borrowing costs will eventually hurt the economy, forcing the Fed to later ease monetary policy. The inversions suggest that while investors expect higher short-term rates, they may be growing nervous about the Fed’s ability to control inflation without significantly hurting growth. The Fed has already raised rates by 450 basis points over the last year. 

Halifax said UK house prices rose at the quickest monthly pace since June, suggesting strength in the property market that may prevent a deep decline. The mortgage lender said Tuesday that prices rose 1.1% last month, the second increase this year, and by 2.1% from a year ago. The figures mark a sharp contrast with rival mortgage lender Nationwide Building Society, which says prices are now falling at the fastest annual pace since 2012.

Most Asian currencies edged lower on Tuesday, led by the Indonesian rupiah, as investors pulled back from risky assets ahead of testimony from Federal Reserve chair Jerome Powell that could give clues to the size of future interest rate hikes. The rupiah weakened as much as 0.46% to hit its lowest level since Jan. 12, while China’s yuan and the South Korean won depreciated 0.1%, each.