USD = R18.35  AUD = R12.31
GBP = R22.29  DXY = 104.11
EUR = R19.54Brent Crude = $75.46 per barrel

Some would say the silly season is upon us, that stretch of 4 day work weeks that lies ahead! The Rand could do with an extended weekend after international headlines drove us to R18.50 on Wednesday as the week’s worst level but unfortunately it already has one eye on Monday.  Luckily we didn’t lose any ground yesterday, but we didn’t post any gains either as we bounced around the R18.40 level. 

After a year basking in the slipstream of aggressive Fed rate hikes, the formerly buoyant US dollar is threatened by bank sector turmoil and falling short-end yields.

The Fed’s balance sheet through Wednesday, released today, shows to what extent the Fed has provided emergency loans at around 4.75% interest and against collateral to US banks; and how much it loaned to the FDIC which is tasked with bailing out all depositors at Silicon Valley Bank and at Signature Bank, which collapsed last Friday and over the weekend. At the same time, it shows that the QT-related roll-off of Treasury securities and MBS continued

Goldman Sachs (GS) continues to lead the charge in sounding the economic alarm bells as a fresh banking crisis rolls through markets and the economy. The investment bank’s chief economist, Jan Hatzius, said Thursday he now sees a 35% chance of a U.S. recession in the next 12-months, up from 25% previously. The increase in odds reflects “increased near-term uncertainty” around the economic effects of small bank stress. A day earlier, Hatzius cut his 2023 GDP forecast by 0.3 percentage points to 1.2% in a new note out Wednesday afternoon.

Fitch Ratings has sharply lowered its expectations for several key performance indicators (KPIs) for the U.S. housing sector in 2023 due to greater than expected mortgage rate volatility and our expectations for benchmark U.S. interest rates to remain “higher-for-longer” as detailed in our latest Global Economic Outlook (GEO). Our revised 2024 forecast shows modest year-over-year (yoy) improvements compared to 2023 for most KPIs. However, the absolute activity levels implied are lower than our prior 2024 expectations, and will be comparable to 2017-2018 levels.

Chinese state media blamed political infighting and poor financial regulation in the US for recent bank failures, escalating the two nations’ war of words amid simmering tensions. “While the management of the banks in question should bear the most direct responsibility for the mismanagement of the companies, the absence or mistakes of the US on financial supervision and macro policies is the most important thing to reflect on from the incident,” the official Xinhua News Agency said in an analysis piece published Wednesday.

Today we wish the Irish Happy St Patricks day.

Be safe on Monday, the official Government line is business as usual.