ZAR: Rand Marginally Firmer, Ramaphosa To Speak In Parliament
USD/ZAR trades on a softer footing as the greenback shows some weakness (BBDXY -0.2%), with global headline flow revolving around US President Trump's talks with his Russian and Ukrainian counterparts. The pair last deals at 18.4994, almost 300 pips worse off, with bears looking for a dip through Jan 24 low of 18.3022, while bullish focus falls on Jan 13 high of 19.2296.
- President Ramaphosa will appear in parliament today to respond to the SONA debate that took place over the past two days. Local reporters noted that the debate revealed continued tensions and disagreements between GNU partners, despite their earlier suggestions that they managed to reach compromise over issues such as National Healath Insurance (NHI) legislation.
- Domestic focus will slowly move to the upcoming 2025 Budget Speech, which will be delivered on February 19. PwC said that a conservative budget could have a positive impact on South Africa's credit ratings in the next 12-18 months.
- SAGB yields sit marginally lower across the curve, despite bounding off lows. South Africa's 5-year and 10-year breakeven inflation rates sit at 4.48% and 5.59% respectively.
- The aggregate BBG Commodity Index has inched higher by 0.2%; the precious metals subindex is 0.2% better off. Gold changes hands ~$7.7/oz. above neutral levels.
- South African mining data will be published at 09:30GMT/11:30SAST.
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EGBS: Citi Wary Of OAT Risks
Ahead of this morning’s OAT-positive headlines Citi wrote “we turn neutral on BTPs, while risk of further widening is perhaps elevated for OATs around today’s inaugural policy speech by PM Bayrou.”
- “The speech is likely to be followed by a confidence vote.”
- “Dilution of the reform or government collapse is likely to weigh on OAT spreads.”
- They conclude with “regardless of the immediate outcome, OATs might begin to price in an eventual change in the pension reform anyway - if not under the current parliament, then after a potential legislative election later this year where the likelihood of a far-right/left majority has perhaps increased vs. the 2024 election.”
EQUITIES: BNP put buyer
Single stock Bank Option, BNP:
- BNP (19/12/25) 56p, bought for 4.79 in 4.2k.
ECB: Holzman Continues To Argue For Cautious Easing
Unsurprising rhetoric from ECB hawk Holzmann this morning, speaking at a Euromoney conference in Vienna:
- "ECB'S HOLZMANN: DON'T THINK WE CAN LOWER RATES TOO QUICKLY, CORE INFLATION IS STILL CLOSER TO 3% THAN 2%" RTRS
- "*ECB'S HOLZMANN: HAVE A LOT OF CHALLENGES ON ENERGY" bbg
- "*ECB'S HOLZMANN: HOPE TO MEET 2% INFLATION TARGET BY YEAR-END" bbg
Holzmann expressed some concerns around energy prices in an interview with Kurier on Dec 28: “It could be the case that we take more time before lowering rates again,”...“It’s true, some energy prices are trending upwards again. But there are also other scenarios for how inflation could return, such as a stronger depreciation of the euro.”
