US Treasury Yield Up:
The yield on the 10-year US Treasury note rose to about 4.62%, hitting its highest level in just under seven months, as markets continued to assess the Federal Reserve’s monetary policy outlook on rate cut slow-down. Median projections by FOMC members indicated that policymakers expect fewer rate cuts than previously anticipated. Weaker economic data, disappointing US consumer confidence, and concerns over Trump’s fiscal policies led markets to adjust their expectations for fewer Fed rate cuts next year. Investors also moved away from the safety of bonds after the US government reached an agreement on a spending bill, preventing a late-year government shutdown. Investors are now awaiting the release of weekly jobless claims data later today.
China Moves to Stimulate Housing Market:
China, that has experienced severe depression in property prices this year, has indicated that it will continue efforts to stabilize and prevent further decline in the property market in 2025. This was according to a work conference by China’s Ministry of Housing and Urban-Rural Development over the past two days. The event highlighted that the government will actively support housing demand and maximize the role of the housing provident fund. Additionally, authorities will strictly control the supply of commercial housing, while increasing the supply of affordable housing to help solve the living problems of a large number of new younger citizens, and migrant workers. Since September, initiatives to boost home-buying have included reducing mortgage rates and minimum down payments, along with providing tax incentives to lower the cost of housing transactions and help stimulate a morbid housing market.
Emerging Market Currencies Struggle against Stronger Dollar:
The USD / ZAR rate increased 0.0942 or 0.50% to R18.75 on Thursday December 26 from R18.66 in the previous trading session. This is the lowest the rand has traded against the US Dollar since 10 June and an indication of the strength of the Dollar against many Emerging Market Currencies. This is partly driven by the lower than projected growth in the local economy that contracted by -0,3% in Q3 and will miss its overall growth target for the year.
There are however expectations that the South African Rand (ZAR) is expected to trade below the key R18.00 mark by the end of Q4, according to Trading Economics global macro models and analysts’ expectations. Other currencies such as the Brazilian Real has hit a new all-time low against the US Dollar and is currently trading at 6.73367 to the Dollar with the previous record set only a week ago at 6.29 to the Dollar. with forecasts for 2024 inflation rising from 4.89% to 4.91%, well above the central bank’s target of 3%. This, coupled with the central bank’s recent open letter acknowledging a likely inflation target breach
Markets:
Indices in the US, all closed in positive territory yesterday with the NASDAQ closing up by 1,37%, the S&P 500 was up by 1,1% and the Dow Jones closing up by 0,91%.Asian markets this morning have seen the Nikkei close up by 1,1% and at 39562, while the Hang Seng is up by 1,08% and is at 20098 currently.
Currencies:
The US Dollar is currently trading at 1.040 against the Euro, at 1,254 against the Pound, and at 157,36 against the Yen. The Rand value dropped further yesterday, with the currency currently trading at R18,74 to the US dollar.
Commodities:
- Gold continues to hold above the $2600 mark, with the price currently at $2,627.70 per ounce
- Platinum prices have continued to regain losses seen in the last month, and is currently trading at $954.80, while Palladium has also seen better prices this week and is at $929.00 currently
- Brent crude is currently trading at $73.71 currently with WTI trading at $70.25 currently.
- Cocoa has seen a gradual increase in price this week and is currently selling at $11,845.54 per ton. Prices are up over 33% in the past month
- Coffee prices have also moved upwards and is at $3.29.53 per pound currently.
Crypto Currencies
- Bitcoin has started another run at the $100,000, mark and has regained some of its losses seen last week, and is currently trading at $98242
- Ether has also seen prices gain some momentum again and while -1,62% down this week is trading upwards and at $3433.60 currently
(All prices quoted at approximately 07H45 – Central African Time)
